Weekly rural property and business update
The following is a brief round-up of some of the current issues relevant to rural property owners and businesses.
A third of UK farms could go out of business if no trade deal is struck with the EU, an economist has warned. More woodland could help many landowners diversify their income streams post Brexit, but they have less than a week to help influence the government’s tree strategy.
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Commodity markets
With many farmers more concerned with getting the rest of this year’s weather-affected crop safely in the barn than selling what they’ve already harvested, feed wheat prices continue to nudge up.
Although, as mentioned last week, market fundamentals look generally bearish, strong sales to China and some concerns about the US maize crop are also injecting some impetus. All eyes will be on the USDA’s next estimates of global supply and demand due out on 11 September.
The poor crop means strong milling wheat premiums are available for quality grains, but a potential surge of imports to beat a £79/tonne import tariff if the Brexit transition period ends without a deal could put a lid on further rises, reports Farmers Weekly.
“Love Lamb Week” failed to stop deadweight lamb prices falling back, but they are still 50p/kg higher than they were 12 months ago.
The Future of English Woodland – Last chance to have your say
Defra’s England Tree Strategy consultation closes on 11 September, so any rural businesses with an interest in woodland or timber-based products who would like to steer the government’s thinking may want to get involved.
It is worth bearing in mind that responses to recent Defra consultation have been dominated by environmental lobby groups and NGOs rather than those from within the industry.
Conservation group Rewilding Britain, in its response, claims that Defra’s tree-planting targets are not ambitious enough and is demanding that woodland cover be doubled to 26% by 2030 with a focus on natural regeneration where possible.
Trade body Confor’s draft response focuses far more on the technical aspects of delivering more woodland from the perspective of the forestry industry.
It is particularly keen that the strategy looks at the entire timber supply chain linking forest to the end product and recognises the cost of woodland management.
Take part in the England Tree Strategy Consultation
Contact Edward Holloway for advice on any forestry projects or acquisitions
Trade talks – Potential impact of a “no-deal” with the EU
Regular readers will know that the farming industry is deeply concerned about the impact of not striking a trade deal with the EU before the Brexit transition period expires at the end of this year.
Outspoken economist Séan Rickard has now quantified this by claiming that one in three farms could go out of business within five years.
It sounds dramatic, but some recent Defra statistics shared at last week’s CAAV conference are sobering.
For the bottom quartile of livestock businesses, £100 of inputs equates, on average, to £47 of outputs before subsidies and environmental payments. Even with that extra cash taken into account they produce only £73 of outputs.
Only 53% deliver outputs equal to the cash put into the business. At 55%, cereal businesses are only slightly more productive.
It is, thus, fairly obvious that many businesses will come under even more pressure as subsidy payments are wound down by 2028.
Mr Rickard’s pronouncement comes in the run up to Back British Farming Day on 9 September when MPs will be asked to pledge their support for the industry.
For advice on how to restructure or diversify your farming business please contact our head of Agri-Consultancy Tom Heathcote.
Residential tenancies – Notice period to end extended
Slightly earlier than expected, the government announced on 29 August that it was extending the notice period required to end a residential tenancy to six months.
The move is to protect tenants financially affected by the Covid-19 pandemic and runs to 31 March 2021.
There are a number of exceptions to the rule – including anti-social behaviour and non-payment of rent for a specified period - depending on the type of tenancy involved so it is worth taking advice if you have issues with your tenants.
Please contact Alastair Paul for more information on landlord/tenant issues.