Land Business Update | Week commencing 10th June 2019

Welcome to our update on key land management, farming, planning and energy issues.

Farming

Provisional harvest 2018 results from our Contract Farming Survey

Total returns to the farmer averaged £375/ha in 2018, the highest level for four years, and compared with £361/ha in 2017. This was due to higher commodity prices and a favourable exchange rate for the calculation of BPS payments, and despite lower yields. The results are based on 71 contract farming agreements, covering 19,400 hectares, mainly in the East of England, East Midlands and South East England. We are continuing to see a shift in rotations towards lower input cost crops, as growers move towards more robust wheat varieties, as well as growing spring barley and spring oats. We expect this type of agreement will become more popular over the next few years due to some farmers needing to adjust their business structure to adapt to reduced levels of direct subsidy, and others using the agreement to free up capital to invest in other ventures. Please contact Richard Means for a copy of the results or to discuss CFAs.

Review of the pilot scheme for seasonal agricultural workers could be brought forward

Home Secretary Sajid Javid has said he could bring forward the planned review of the seasonal agricultural workers scheme (SAWS). The current pilot scheme, which allows up to 2,500 workers to enter the UK, was due to be reviewed after December 2020.

National Audit Office publishes critical early review of Defra’s new farming programme

The NAO’s review focussed on Defra’s ability to hit the recruitment targets it set itself for the new Environmental Land Management Scheme (ELMS) and also its ability to develop the administrative systems it will need. The NAO concluded that Defra has not yet done enough to demonstrate that it can achieve the wide-scale participation that it envisages. Defra’s target is for 82,500 ELMS agreements in England by 2028; this is over four times the number of Countryside Stewardship agreements and there are only 64,000 farm holdings over 20 hectares in the country, and these cover 97% of the farmed area. In addition, the NAO said that unless there is a clearer programme, the information systems and planning will not be in place to allow farmers to prepare in the way they need.

EC warned by farming groups not to undermine EU producers in its agreement with Mercosur countries

Three of Europe’s main agricultural lobby groups (on cereals, livestock and poultry meat) have written to the European Commission to say that its proposals on access to European markets under the proposed EU-Mercosur trade agreement are ‘too generous’. The lobby groups say that the proposed access will destabilise family farms and dramatically undermine EU meat production, the livestock processing sector and the EU meat markets, unless the EU has the scope to reduce it when market conditions dictate. The UK will face very similar decisions when it starts negotiating trade agreements.

European update – European budget and CAP reform to be agreed by end of the year

The European Commission is aiming to agree the reform of the Common Agricultural Policy by the end of the year, according to EU Farm Commissioner Phil Hogan. This is however contingent on the overall European budget, called the Multi-annual Financial Framework or MFF, being agreed in the autumn. There is still considerable debate between Member States on whether farming will retain its share of the budget (or even perhaps increase it due to new policy challenges like climate change) and on the amount of autonomy (often called subsidiarity) that Member States have to set their own farming policy. At the same time, the EU is engaged in a number of trade talks, including with the US, Australia and Mercosur countries.

Energy

Smart Export Guarantee is proposed as replacement for the Feed-In Tariff scheme

The Government is going to consult on introducing a new scheme, called the Smart Export Guarantee or SEG, to encourage the small-scale export market to develop. Small-scale energy producers (up to 5MW capacity) will be able to export and sell their excess energy to energy firms. There will be significant freedom of contract, with each energy firm able to set its own payment rate(s) for the energy bought. The Government expects the SEG market to start operation by the end of 2019. The Feed-In Tariff scheme closed to new entrants on 31st March 2019.

Environment

UK government commits to net zero emissions by 2050 to reduce climate change

Launching the policy, which amends the Climate Change Act 2008, the Prime Minister said that the target would also reduce pollution and benefit public health, so cutting NHS costs. The UK is the first major nation to legislate for this target. The policy has been widely praised by green groups although some have said that we need to reach net zero sooner and that the clause in the policy that allows it to be reviewed if other countries do not set similar targets should be removed.

Forestry

New planting in Scotland exceeds target

11,200 hectares were planted in Scotland in 2018, more than the current annual target of 10,000 hectares. This is good news and represents 84% of all new planting across the UK. The Scottish Government has set a new higher target of 15,000 hectares a year from 2024-25 to help address climate change, through the trees storing carbon. While positive, the planting rate will have to increase significantly if it is to reach the levels suggested by the Committee on Climate Change, which are around 1.5 million hectares of new planting by 2050 in its ‘high’ scenario.

Residential

Roadshow on increasing MEES requirement to EPC level C

The Government is holding three events with landlords and agents to discuss the proposed increase in minimum energy efficiency standards (or MEES) to an EPC Band C by 2030 ‘where practical, cost-effective and affordable’. The meetings are for landlords of any type or number of domestic properties and their agents, and are expected to be followed by a formal consultation. The events are being held in Cardiff, Peterborough and Manchester and can be booked here.