Collaborating to save nature

Opinion

Two stories in this week’s update might rankle with readers. News that Defra is having to step in to examine Natural England’s controversial proposals for destocking Dartmoor suggests that work needs to be done to on how nature bodies communicate and problem solve. Imposing solutions arbitrarily on farmers who have worked the land for generations doesn’t seem the best way to get their buy in. Restoring nature should be a collaborative affair. And while many will agree that the Herefordshire farmer convicted of damaging the River Lugg deserved some kind of punishment, some may feel his 12-month jail sentence is severe considering the ongoing and unpunished pollution of Britain’s rivers with untreated sewage AS

Do get in touch if we can help you navigate through these interesting times. You can sign up to receive this weekly update direct to your email here

Andrew Shirley Head of Rural Research; Mark Topliff, Rural Research Associate

In this week's update:

• Commodity markets – Ukrainian grain ban boosts prices
• Natural England - CLA calls for overhaul
• Food inflation – Fastest rate for 45 years
• Carbon offsetting – Microsoft turns to British farms
• Farmland birds – GWCT survey results
• Out and about – The Alladale Wilderness Reserve
• Grants – Water management fund open
• River destruction – Landowner handed prison sentence
• International news – 55% of global economy dependency on nature
• Farmland Index – Prices rise in quarter 1
• The Wealth Report – 2023 edition out now
• Farmland Index – Agri-land 2022's top-performing asset
• Staff Salaries Report – Rural wages benchmarked
• On the market – Australia and Africa calling

Commodity markets

Ukrainian grain ban boosts prices

Poland, Hungary and Slovakia have announced bans on Ukrainian grain and oilseed imports following the pressure on their local market prices that we reported last week. Ukrainian grain and oilseeds that had not gone through the Black Sea ports have been transported via its EU neighbours, but transit bottlenecks have meant huge quantities have stayed in these countries pulling back local prices, according to analyst Refinitiv. The EU Commission has proposed a €100 million support package, but only if the unilateral measures are lifted.

Meanwhile, fertiliser prices have fallen sharply since the start of the year, with imported ammonium nitrate currently around £450 per tonne, nearly half that of the October peak average of £870 per tonne. Tumbling natural gas prices have been a key driver, but farmers moderating their use of the high-priced input has influenced demand MT

Talking points

Natural England - CLA calls for overhaul

Defra will hold an independent inquiry into Natural England's (NE) proposals to impose reduced cattle and sheep grazing levels on Dartmoor. Farmers would need to comply with the regime to continue to receive enhanced environmental payments and reverse what NE see as the poor condition of sites in the national park. But farmers have warned that reducing stocking rates further would force them out of business. The deterioration in the relationship between Dartmoor farmers and NE has led lobby groups such as the CLA to call on "Defra to launch a full-scale review of NE's remit and track record, casting some light on an organisation that does not receive sufficient scrutiny" MT

Food inflation – Fastest rate for 45 years

Bread and cereals helped drive up food inflation at the fastest rate since 1977 in the 12 months to March 2023, according to the Office for National Statistics (ONS). The ONS states that prices of food and non-alcoholic drinks were 19.2% higher in the year to March, up on February's figure of 18.2%. This rubs against the trend seen in some commodity's prices. Grain and oilseed spot prices fell between a third to two-thirds since the peak in April last year. Steep climbs in milk prices last year are now being eroded with processors announcing cuts of between 3.5ppl and 10.5ppl since the start of the year - and more to come in May.

The ONS also reported in it's latest opinions and social trends survey that 51% of adults bought less food and that one in four experienced shortages of essential food items in the two weeks between 22 March and 2 April MT

Carbon offsetting – Microsoft turns to British farms

Microsoft has confirmed its purchase of the first carbon removals from UNDO, a start-up using enhanced rock weathering (ERW) technology for carbon capture. The process involves spreading finely crushed basalt rock across agricultural land, accelerating the natural weathering process and locking carbon in bicarbonate ions. UNDO claims that basalt also releases nutrients, reducing the need for inorganic fertilisers and lowering greenhouse gas emissions. Microsoft will purchase carbon credits for carbon captured through an UNDO project in the UK, utilising basalt from Breedon's Cragmill Quarry, and enabling the removal of 5,000 tonnes of CO2 over a 20-year period MT

Pigs – Defra mulls regulated contracts

Nearly two-thirds of UK pig producers reckon their sale agreements with processors are not honoured. This lack of fairness was reported in response to a Defra consultation exploring contractual practice in the sector. A quarter of the producers said they are using only verbal sale agreements. The government has pledged to regulate pig contracts to support the supply chain and promote fairness and stability throughout the industry. MT

Farmland birds – GWCT survey results

Nearly 150 bird species were recorded as part of the 2023 Big Farmland Bird Count. The tenth annual survey by the Game and Wildlife Conservation Trust (GWCT) saw over 1,700 farmers from around the UK take part counting 460,000 birds - more than 200,000 of which were 33 species on the red list deemed at risk from extinction. Starlings, a red-list species, bagged the top spot in the count, followed by Woodpigeons and Rooks. Most of the participants, 62%, are in an agri- environment scheme, and nearly half provide supplementary feed to help birds through winter. The GWCT says the survey "aims to highlight the positive work done by land managers and gamekeepers for farmland bird populations." MT

Out and about – The Alladale Wilderness Reserve 

As part of the 2023 edition of The Wealth Report I was lucky enough to visit the Alladale Wilderness Reserve north of Inverness to see the work of owner Paul Lister (pictured above) and his team. What was striking is that the Highland landscape we take for granted today is drastically different to how it would have originally looked. Over the past 20 years Paul has been working to restore the landscape. Read the article to find out more. AS

Need to know

Grants – Water management fund open

Defra has announced that the second round of the Water Management grant fund is now open for applications until 12 July 2023. Part of the Farming Investment Fund, these grants are open to horticultural and arable businesses that grow or intend to grow food crops, ornamentals, or forestry nurseries. There is a minimum grant of £35,000 and a maximum of £500,000 available per applicant. As it's a competitive round, there is a 2-step application process. The first step is an online eligibility checker, followed in the next step by an invitation to tender. Knight Frank's grant expert, Henry Clemons, can guide you through the process to ensure a greater chance of success. "These grants could really make a difference for arable and horticultural businesses looking to improve water use efficiency, costs and in securing supplies in our increasingly unpredictable climate," says Henry MT

River destruction – Landowner handed prison sentence

A landowner in Herefordshire has been sentenced to 12 months in prison and ordered to pay costs of £600,000 for carrying out unconsented works on 1.5 km of the River Lugg. Mr Price dredged and bulldozed the riverbanks as well as removing mature trees and vegetation. His actions breached several regulations, including the Reduction and Prevention of Agricultural Diffuse Pollution (RPADP), and operations specified with a Site of Special Scientific Interest. This is the first time that there has been a prosecution under RPADP. Lawyers acting for the farmer have lodged an appeal MT

International news – 55% of global economy dependent on nature

How important is nature to the global economy – very important, according to research from PwC. The assessment of 163 sectors concluded that 55% of global GDP, or $58 trillion, depends on nature. This is an increase on a 2020 estimate of $44 trillion. In addition, PwC found that more than half of the market value of listed corporates on 19 major stock exchanges are exposed to risks relating to nature loss and degradation. On the London Stock Exchange, 47% of companies are highly or moderately dependent on nature. The report states that "businesses' reliance on nature covers everything from crops grown for the food and drink industries or the use of timber in construction, to rubber in the automotive industries, and plants that are critical for the pharmaceutical industry."

PwC say that businesses must place nature loss on the same level as climate change in their risk assessments. Will Evison, co-author of the report, says, "businesses may also find natural alignment between climate and nature priorities.

For example, many nature-based solutions to climate change, such as reforestation, help capture emissions while also enhancing biodiversity." This could be a wake-up call for UK companies to consider the potential impact of nature loss on their bottom line and look to UK nature-based solutions MT

Knight Frank Research

Farmland Index – Prices rise in quarter 1

Agricultural land proved resilient in the first three months of 2023. While residential property values weakened, the average price of bare farmland rose by 2%, edging closer to £9,000/acre, according to the Knight Frank Farmland Index.

The hike takes the annual rise to 11%, reinforcing farmland's reputation as a good hedge against inflation. Read the full report for more data and insight

You can also listen to the latest edition of our Intelligence Talks podcast where I discuss biodiversity net gain and nutrient neutrality schemes with my Rural Consultancy colleague Isabel Swift AS

The Wealth Report – 2023 edition is out now

Knight Frank's leading piece of thought leadership on property and wealth trends was launched last week and includes an interview by me with one of Scotland's pioneering rewilders, as well as some thoughts on why farmland could be one of this year's most in-demand property investments. Download your copy to find out more AS

Estate Staff Salaries Survey – Rural wages benchmarked

Just a reminder that the latest edition of the Knight Frank Estate Staff Salary Survey is available to download. The report reveals the average salaries paid for a wide range of rural estate and farming roles and level of wage increases being offered by rural businesses. Also highlighted are the key employment issues facing the rural economy. Download your copy here or get in touch with Chris Terrett for more details AS

On the market

A sweet New Zealand ESG investment opportunity

Ownership restrictions can often prevent overseas purchasers buying agricultural land in New Zealand, but Makopua Station, on the market with our associate Bayleys, could be an exception, according to the firm's Head of Rural Nick Hawken. "It is likely foreign investment is possible given it is already a planted established forest. The 1,657-hectare property has been planted with four million Mānuka trees that will eventually yield 60,000kg of the sought-after honey.

There are also significant carbon-farming opportunities, says Nick. Tenders close on Friday 26 May AS