The Knight Frank Rural Property and Business Update – 8 March

Last week’s budget did not contain any great bombshells for agricultural and rural businesses, but new consultations slated for release later in the month could be more concerning - some tax experts say they expect to be busier then than on the budget day itself. A lot of the measures were connected to sustainability and delivering net zero, something savvy landowners should aligning themselves with. The Welsh government’s decision to push ahead with a whole-country Nitrogen Vulnerable Zone shows where policy priorities lie at the moment. But at least the UK’s fleet of classic cars will be able to motor on.

Please do get in touch with me or my colleagues mentioned below if you’d like to discuss any of the issues covered. We’d love to hear from you

Andrew Shirley, Head of Rural Research

In this week’s update:

• Commodity markets – Oilseed rape surging
• Budget 2021 – Some positives, but landowners not out of the woods yet
• Trade – Commission urges tax on sub-standard food imports
• The Wealth Report – Carbon farming as a sustainable investment
• Shooting survey – still a chance to win a Goliath of sloe gin
• Bioethanol – Classic cars safe from greener petrol
• NVZs – Welsh move angers farmers
• Renewable Heat Incentive – Non-domestic scheme closes
• Overseas news – Ozzy farms face Covid labour drought

Commodity markets – Oilseed rape surging

Last week I said that oilseed rape values were on the cusp of hitting £400/t. Well, I wasn’t wrong. Following a 6% hike on the week, they smashed that barrier and are now almost a third higher than this time last year. Interestingly though, despite concerns about the global 2021 harvest, new crop prices haven’t followed suit to the same extent. According to trader Frontier the EU is expecting to land 2.25 million tonnes of rapeseed from Australia between January and June, compared to one million tonnes the previous year.

Budget 2021 – Some positives, but landowners

not out of the woods yet

Last week’s “pandemic” Budget was, on balance, largely positive for rural landowners and businesses.

Those with hospitality diversifications will benefit from the six-month extension to the 5% rate of VAT on hospitality, accommodation and admission to certain attractions, as well as the extended furlough scheme, which now continues until September, and business rates holiday until June.

Larger businesses registered as companies will be affected by the rise in corporation tax to 25%, but new tapers and allowances will mitigate some of the impact for all but the largest. Companies will now be able to claim a 130% super-deduction on investment into plant and machinery for two years from 1 April.

There were also helpful announcements around the green economy that could be beneficial. These included a new Net Zero Innovation Portfolio of finance totalling £1bn. Funding will be allocated on a competitive basis to sectors including long-duration energy storage, floating offshore wind; biomass and regenerative agriculture.

Chancellor Rishi Sunak also committed a further £375m for a new Future Fund: Breakthrough scheme. The fund will work with the private sector to invest in “high-growth, innovative UK firms” including those in cleantech.

The government has announced a “tax” day on 23 March when it says a number of consultations will be launched. A report from a parliamentary committee on “Tax after coronavirus” gives some indication of the direction of travel.

Read my colleague Tom Bill’s views on the housing market aspects of the budget

Trade – Commission urges tax on sub-standard food imports

The Trade and Agriculture Commission (Tac), which the government was forced to create last year, has just recommended that all food imports that do not match the welfare and environmental standards adhered to by UK farmers should be subject to tariffs.

However, the commission also recommends further trade liberalisation with the rest of the world with food produced to equivalent standards allowed in tariff free.

Tac was formed following pressure from farmers and the public worried that a post-Brexit rush to strike trade deals could lead to the import of lower quality, more cheaply produced food that British farmers would struggle to compete with.

Read Tac’s full recommendations

Shooting survey – still a chance to win a Goliath of sloe gin

Just a quick reminder that our shooting sentiment survey 2021, which aims to measure the impact of Covid-19 on pheasant and partridge shoots, is still open. All contributors will get a full breakdown of the results and be entered into our draw to win a 4.5-litre bottle of Foxdenton sloe gin.

Take our 2021 Shooting Sentiment Survey

The Wealth Report – Carbon farming as a sustainable investment

The 2021 edition of The Wealth Report, launched last week, includes some wise words from Tom Heathcote, our Head of Agri-Consultancy on how rural property could be one of the top sustainable investment choices of the next few years.

Read the article on alternative real estate investments including Tom’s thoughts

Bioethanol – Classic cars safe from greener petrol

In last week’s Rural Update I mentioned that the imminent introduction of E10 petrol to the UK, which includes 10% bioethanol, was set to support grain prices.

However, E10, due to its high water content and impact on components like rubber seals, is not suitable for cars made before 2000 and particularly classic cars. Collectors had feared that the introduction of E10 would make running their cars, including older and often beloved petrol-engined farm Landies, impractical.

Fortunately though, the government has listened to their concerns and E5, which has a lower bioethanol mix, will still be available. It will be known as “Super-Unleaded”.

NVZs – Welsh move angers farmers

Welsh farmers and their representatives have lambasted policy makers after a bid to overthrow a move to declare the entire country a Nitrate Vulnerable Zone was narrowly defeated in a Senedd vote on 3 March.

NFU Cymru president John Davies said: “I am deeply disappointed that Welsh government, in the height of a global pandemic, has proceeded with a copy and paste into Welsh law of one of the most ineffective and criticised pieces of EU regulation.

Renewable Heat Incentive – Non-domestic scheme closes

The Non-Domestic Renewable Heat Incentive Scheme (NDRHI) will close to new applicants on 31 March 2021. However, due to unprecedented challenges created by the Covid-19 pandemic, certain NDRHI projects which are not eligible for Tariff Guarantees (Non-TGs) and risk missing the scheme closure deadline on 31 March 2021 can apply for an extension application granting them until on or before 31 March 2022 to commission their plant and submit a properly made full application for accreditation.

Read Ofgem’s full notice

For more information on how you could benefit from renewable energy please contact David Goatman of our energy team

Overseas news – Ozzy farms face Covid labour drought

Much of the labour needed to harvest Australia’s fruit and horticultural produce comes from the hundreds of thousands of overseas backpackers who pick up casual work to fund their travels. But the country’s strict Covid-19 entry restrictions have seen numbers dwindle leaving tens of millions of dollars of crops to rot or be ploughed back in to the ground.

According to farming organisations the sector is facing a 26,000-strong labourer deficit. Campaigns to encourage more Australians to sign up for farm work have gone largely unheeded and a plan to use prisoners was scotched after an outcry.

Photo by Luther.M.E. Bottrill on Unsplash