Covid 19 – Rural property and business update
The following is a brief round-up of some of the Covid-19 related issues affecting rural property owners and businesses
2 minutes to read
Commodity prices
Beef prices for now remain stable, but the loss of orders from the foodservice sector and increased supermarket demand for cheaper mince rather than prime cuts could lead to downwards pressure on prices. Lamb values continue to slide due to a drop in demand
Wheat prices dropped slightly off the back of gains in the value of sterling and a drop in demand from industrial millers.
With far fewer people taking to their cars around the world, filling stations are much quieter. This has led to a drop in demand for bio-ethanol, which is derived from maize and blended with fossil fuels to make them supposedly “greener”. This could have a knock-on impact on feed wheat prices as more maize gets fed to livestock instead.
Dairy farmers about to experience a spring flush of milk production from cows feeding on lush pasture are also concerned that a drop in demand from caterers and restaurants could hit prices.
The farmland market
The latest results from the Knight Frank Farmland Index show that the average value of bare agricultural land in England and Wales has not yet been affected one way or the other by the Covid-19 outbreak.
According to the index, based on the limited amount of market activity that had had occurred before the outbreak took hold, prices dropped marginally by 0.6% to £6,960/acre in the first three months of the year.
With the market unlikely to resume until the summer, the index will tread water for at least the next quarter. If movement restrictions are eased in time for some farms to be launched in June or July we may see a short-term spike in prices as supply fails to match the pent-up demand that was released by the result of last year’s general election.
To see how farmland has performed compared to other asset classes over the long and short term read the full Q1 report [inset hyper link to research report]
Landlord tenant relationships
Agricultural landlords and tenant farmers have been urged to work together during the Covid-19 outbreak by their respective lobbying organisations and DEFRA.
In a statement issued jointly with the Tenant Farmers’ Association, CLA President Mark Bridgeman said: “We know that landowners value their relationships with tenants deeply, and we are working with CLA members to underline the importance of working closely with tenants who are experiencing difficulties due to Coronavirus.
We have advised landlords to discuss with farming tenants any problems they are facing so that a mutual solution can be found, and we make sure farming businesses can carry on as well as possible in these difficult circumstances.
“We also suggest that, as far as possible, current disputes are put on hold and that formal proceedings for any non-payment of rent are used only as a matter of extreme last resort.”