The Rural Update: Taking agricultural opportunities
Your weekly dose of news, views and insight from Knight Frank on the world of farming, food and landownership.
9 minutes to read
Viewpoint
Although it is dangerous to read too much into a quarterly set of statistics, the latest numbers from the Office for National Statistics revealing the stark difference between the number of farm businesses closing and the number of new ones opening (see News in brief) should be of concern. Business thrives on confidence, and there is a dearth of that in agriculture at the moment. However, there is also a danger that too much pessimism can be self-fulfilling. Farming isn’t an easy place to be right now, but there are opportunities available. Government support, such as the Capital Grants Scheme, is becoming increasingly time-limited, but being ready to take advantage of schemes as soon as they open makes sense. Whether or not the predictions for carbon credit values discussed below are accurate, new nature-based income streams will become available. But 'business as usual' does not appear to be an option.
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Commodity markets
Milk up, spuds down
Good news for dairy farmers as the average farm-gate milk price across the UK rose 0.8% to 43.55 p/litre in June, a 12% year-on-year increase. Potato growers, however, have not fared so well with a large European crop putting downward pressure on prices. Market analysis firm Expana says its benchmark price for English white packing potatoes is down 88% over the past 12 months at £90/tonne.
The headlines
Capital grants running out
Farmers and landowners wanting to apply to Defra’s Capital Grants Scheme (CGS) need to get their applications in quickly.
CGS, which provides funding for environmental projects such as planting hedgerows, managing boundaries, improving water and air quality, restoring habitats, and introducing natural flood management measures, only reopened at the beginning of July, after unexpectedly being closed in November 2024.
Defra, however, said last week that over half of the £150 million available for this round of the scheme had already been allocated.
A statement from the department said: “We will close this round of funding as soon as the remaining budget is fully allocated. At that point, we will not accept further applications, including those that have been started but not submitted.
“We will give notice of the closing date if possible, but this may not always be feasible. Submitting an eligible application does not guarantee funding. We plan to improve the offer further and expect to open a new round in 2026.”
Please contact Mark Topliff for help applying to any grant schemes.
Carbon credits to hit £500
Meanwhile, a new report offers some thought-provoking predictions for those looking to the private market to deliver environmental income streams.
The latest update to the Oxygen Conservation Carbon Curve forecasts that the value of premium UK carbon credits will peak at £500/tonne by 2050. The top price achieved to date is around £125/tonne, significantly higher than the £60/tonne predicted for 2025 in the first edition of the curve, which was published in 2023.
The curve, created by Oxygen Conservation’s Richard Stockdale and Chris Winter, predicts the fastest growth in prices will occur between 2040 and 2050 as firms rush to hit their net-zero targets and the demand for credits outstrips supply.
Global carbon credit investment has stalled amid allegations of greenwashing and a lack of transparency, but this creates opportunities for high-integrity credit providers, the report suggests.
News in brief
Higher-tier stewardship details
Defra has just published further details of the new Countryside Stewardship Higher Tier agreement (CSHT), which will reopen in September following its closure in 2023. Payments will be available for 132 actions, featuring a number that are new or improved, and 142 capital items, including 25 new ones. Initially, CSHT will operate as an invite-only scheme. For more information, please contact Mark Topliff.
Welsh organic support
As part of its newly launched Sustainable Farming Scheme (SFS), the Welsh Government has restarted financial support for farmers converting to organic farming systems. Under the £2 million Organic Conversion Scheme, which opened last week and closes on 12 September, producers will receive an area-based payment over the two-year organic conversion period. Payments will vary depending on farm type, with horticultural businesses receiving the highest levels.
Record farm business closures
The number of businesses closing in the agriculture, forestry and fishing sectors has hit a record high, according to the latest data from the Office for National Statistics, which records company “births” and “deaths” by industry. In the first quarter of the year, 1,895 businesses shut – the most since the ONS began recording the data in 2017. During the same period, just 805 new businesses were created, the biggest recorded differential between “births and deaths”. Although the trend has been ongoing for some years, critics of the government say the reforms to Inheritance Tax in last year’s Autumn Budget have exacerbated it.
Water regulator plea
Following the government’s decision to scrap the water regulator Ofwat and streamline regulation of the water sector, farmers are calling for agriculture to be part of the reforms recommended in the final report published last week of the Independent Water Commission, chaired by Sir Jon Cunliffe. NFU Vice-president Rachel Hallos said: “Ultimately, we need a joined-up approach that includes a comprehensive water management strategy that allows us to collaborate better with government, local authorities and water companies, and prioritises UK food security as national security.”
International court climate ruling
The International Court of Justice (ICJ) has just delivered arguably its most consequential ruling. Last week, the court confirmed that a “clean, healthy and sustainable environment” is a human right. This means that countries party to the UN’s numerous human rights treaties, including the Universal Declaration of Human Rights, are now required to guarantee the enjoyment of such rights by addressing climate change. Although not legally binding, the ICJ’s ruling could open the floodgates to numerous claims, including countries affected by climate change suing other countries with high levels of emissions. Agriculture could find itself caught up in the litigation.
Earth overshoot creeps forward
Coincidentally, the ICJ’s ruling was delivered around the same time that “humanity’s demand for ecological resources and services exceeded what the Earth’s ecosystems can regenerate” in 2025, according to calculations by Global Footprint Network. The date of what is known as Earth Overshoot Day has gradually been getting earlier. This year it was on 24 July, compared to 9 August in 2020. On a country basis, the UK overshot on 20 May.
India whisky boost
The UK and Indian governments have signed off on a free trade deal that will see improved access for British whisky, gin, salmon, chocolate, biscuits and lamb. The NFU said it was disappointed no agreement had been reached on dairy exports, but was relieved that the agreement did not offer any compromises on welfare and quality standards.
Animal welfare labelling
When it comes to animal welfare, Parliament’s Animal Sentience Committee is calling for clearer labelling to allow consumers to make more informed decisions based on the provenance and production systems of the food they are buying. “Trade deals may increase the availability of imported animal products produced to different welfare standards, potentially undermining UK welfare standards. Without clear labelling, consumers struggle to identify products that align with their welfare expectations,” the committee said.
CAAV award for KF consultant
Congratulations to Llŷr Thomas, a trainee surveyor in our Rural Consultancy team, who has just won the CAAV Valuation Award for achieving the highest mark of his course at Harper Adams for a recently undertaken valuation assignment, and for also scoring an extraordinary 92 on his farm business management assignment.
The Rural Report SS 25 – Out now
The Spring Summer 2025 edition of The Rural Report, Knight Frank’s flagship publication for rural businesses, which looks in more detail at many of the issues discussed in The Rural Update, is out now. The new report includes the latest news, research and insights from Knight Frank’s rural property experts, as well as thought-provoking contributions from some of Britain’s most iconic estates.
Available online and in print, you can click here to access the full report.
Win wine with RR feedback
If you’ve had a chance to read The Rural Report, we’d love to hear your feedback, which will help keep future editions of the report as relevant as possible. Complete our one-minute survey by 30 July 2025, and you’ll be entered into a draw for a Wiston Estate Sparkling Trio of wine.
Properties of the week
Devon delight
Those looking for a small residential estate with extra income in the southwest will want to take a look at Ebberly House at Roxborough, near Winkleigh. A Grade II* listed Georgian house with nine bedrooms sits at the heart of the picturesque 249-acre property, while seven further houses let under assured shorthold tenancies generate a significant rent roll.
For more information, please contact Will Oakes.
Historic Kent estate home to rent
For anybody looking to sample estate living without making a long-term commitment, Knight Frank’s Rural Consultancy team in Kent has an intriguing option on offer. Newhouse at Mersham, near Ashford, which was once home to The Countess Mountbatten of Burma and Lord Brabourne, is part of the idyllic 2,700-acre Hatch Park Estate. Now available to rent, the nine-bed period property costs £7,995 a month. For more information, please contact the team’s Katie Bundle.
Discover more of the farms and estates on the market with Knight Frank
Property markets Q2 2025
Farmland – Uncertainty dominates
Despite cuts to support payments and lacklustre grain prices, the average price of bare agricultural land fell just 2.3% in the second quarter of the year, according to the latest instalment of the Knight Frank Farmland Index. “It’s really difficult to discern any clear value trends at the moment because of reduced transaction levels,” says Will Matthews, Head of Farms & Estate Sales. Download the full report for more data and insight.
Country houses – buyers’ market
It’s a buyers’ market when it comes to rural homes, according to the latest research from Tom Bill, Knight Frank’s Head of UK Residential Research. The Knight Frank Prime Country House Index slipped by 2.5% in Q2, the second-largest quarterly decline since Q1 2009. At the same time, the number of properties for sale is up 9% compared with this time last year. On average, there are six prospective buyers for each new instruction, compared with 19 at the height of the Covid-19 pandemic, while sales are achieving 94% of the asking price. Read more of Tom’s numbers and insight.