English Farming Update | Spring 2024
Welcome to this quarter’s English Farming Update, which is produced by our Farming Research Group and reports on market and administrative issues that affect farmers’ business decisions and on which they may need to act.
Defra secretary Steve Barclay used the 2024 Oxford Farming Conference as a platform to launch an update of the Agricultural Transition Plan. The headlines include a further increase in payment rates for Countryside Stewardship (CS) and the Sustainable Farming Incentive (SFI) by an average of 10%, with some new premium payments being introduced to encourage farmers to embrace 21 priority actions.
The Improving Farm Productivity Grant online checker has opened. The grant will pay for capital items that use robotic and automated equipment to aid livestock and crop production, along with the installation of solar equipment.
Arable prices as shown in the market update have fallen around 15% since this time last year. Lower prices will mean significantly reduced profitability for grain and oilseed farmers in 2024.
We updated our arable farm profitability model during the winter to produce revised forecasts for harvest 2023 and harvest 2024. The net margin for an average performing arable farm for harvest 2024 is expected to be £258/ha (£208/ha in 2023) and for a higher performing farm it is expected to be £475/ha (£416/ha in 2023). However, weaker grain prices since the New Year along with the effects of very high rainfall over the winter mean that the outlook for 2024 remains uncertain; judicious cropping decisions and careful marketing will be key.
In farm business news:
Medium-term drivers of farm production in Europe
The EU has published a report on the main drivers expected to affect farming in the region in the medium-term to 2035. They are:
- A continuing, but slower, increase in farm size. In the past, this has led to growth in farm productivity.
- Climate change and its impacts on key natural resources like water and soil. It is expected to reduce growth in yields and could lead to changes in crop cultivation patterns.
- Continuing changes in consumer demand.
These are expected to include lower meat consumption, especially of beef and pork; dairy product consumption is expected to be stable; and increases in consumption of some plant proteins, such as pulses. These changes are expected to lead to a stable area used for arable production but a switch in the arable crops grown, from cereals to soya beans and pulses. The area used for animal production is also expected to be stable, due to more extensive farming systems offsetting the expected reduction in livestock numbers.
Defra revises SFI and CS payments and options for 2024
Defra secretary Steve Barclay used the 2024 Oxford Farming Conference as a platform to launch an update of the Agricultural Transition Plan, focusing on changes to incentivise more farmers to sign up to an agri-environment scheme. The headlines include a further increase in payment rates for Countryside Stewardship (CS) and the Sustainable Farming Incentive (SFI), with some new premium payments being introduced to encourage farmers to embrace 21 priority actions. Mr Barclay called his announcement ‘the biggest upgrade to the UK’s farming schemes since leaving the European Union’.
Improving Farm Productivity Grant
The Improving Farm Productivity Grant online checker has opened for Round 2 of the scheme. The grant will pay for capital items that use robotic and automated equipment to aid livestock and crop production, along with the installation of solar equipment. For more information on the grant please contact Alice Johnson
Updated arable farm profit forecasts for harvest 2024
We have updated our arable farm profitability model using current market data to produce revised forecasts for harvest 2023 and harvest 2024. The modelling tool uses a set of universal assumptions to provide an outlook for the sector. The analysis shows that the net margin – which can be considered to be the equivalent of profit, before rent and finance – for an average performing arable farm for harvest 2024 is expected to be £258/ha. This is higher than the estimate for harvest 2023 (£208/ha) owing mainly to higher grain prices currently available for 2024 crops compared with 2023 crops. The model shows that higher performing businesses can expect much better results than the average performing businesses (£475/ha for 2024) due to higher yields and lower fixed costs.
Biodiversity Net Gain start date delayed
The start of mandatory BNG, which was already delayed from November to January, was postponed again but the government has now said it will start on 12th February for major development (>0.5 ha or 10 or more houses) and on 2nd April for small sites (fewer than 10 houses or <0.5 ha site size, or <1,000m2 commercial development or <1 ha site size). The requirement to deliver BNG will apply to most planning applications, apart from those under deemed permission or a Local Development Order. As might be expected, conservation organisations have been critical of the delays to its introduction, saying that the failure to plan for the policy properly is an indication of how the government is prioritising the environment. Please speak to Alex Brearley, our head of Natural Capital, if you would like to discuss BNG.
Proposed planning reforms would boost the rural sector
There has long been a feeling that the planning regime has stifled economic growth in the countryside. So, it is encouraging that the Government is now recognising the importance of planning reforms which will support and boost the rural economy. Since the introduction of national Permitted Development (PD) rights, farmers and landowners have had greater opportunities to convert, expand and build on their land. We have many clients who have used these rights to diversify and generate alternative income without the requirement for a full planning application. However, there have been frustrations about some of the limitations. A consultation launched in July 2023 by the Department of Levelling Up, Housing and Communities proposes beneficial changes to PD rights for farms and rural businesses, including increasing the limits on conversions to housing and allowing greater flexibility to encourage farm efficiency and diversification. We await the Government’s response to the consultation with anticipation.
Operators investing billions in new EV charging sites
Electric vehicles are now accounting for about 20% of all new car sales and it is estimated there are about 850,000 fully electric cars currently on the road in total and an additional 530,000 plug-in hybrids. As the number of cars has increased, so has the number of chargers available just not by enough.
The Government’s target is for 300,000 public chargers to be available by 2030, but Zap- Map, a website which tracks the rollout of charging devices, estimates there were just 48,450 electric vehicle charging points across the UK at the end of August 2023. While this represents a 42% increase in the total number of charging devices since 2022, there is still clearly a long way to go. This provides an opportunity for landowners with property close to major road networks and for landlords of rural commercial buildings.
Read more from the Strutt & Parker Farming Team on:
- Dates for your 2024 diary
- Global grain market update
- Livestock update
- Fertiliser & fuel update
- Farm business news
