Agri View Winter 2018-19

Winter 2018/19 Rural update from Fisher German

2

Welcome

3

Harry’s view

4 Innovation in partnership 6

Farmland market

8

AD plants

10 Benchmarking

Embracing change …it’s coming, like it or not.

12 Brexit 14 Online auction service Inside this issue:

Welcome At the time of writing this welcome piece to AgriView, the Secretary of State for Environment, Food and Rural Affairs, Michael Gove, has introduced the Agriculture Bill to Parliament, the first of its kind since 1947.

We can begin to see the shape of the post Brexit England farm policy. Whilst we welcome the Bill, caution is needed until further details are understood and the impact on businesses can be assessed.

There is a great deal of detail which will determine what are appropriate actions to take, and there is still the unresolved matter of post Brexit trade arrangements which will arguably have a greater long-term impact.

In this edition of AgriView, our chairman Harry Cotterell encourages us all to embrace change, and Richard Sanders gives his thoughts on how to mitigate the risks of a possible chaotic exit

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from Europe. Those farmers who take the time to analyse the strengths and weaknesses of their businesses, embrace new technologies and drive efficiency will succeed in a potentially challenging period.

The same is true when entering into contract farming agreements, where progressive contractors with high levels of attention to detail and the economies of scale to coordinate purchasing of inputs, will enable their farming enterprises to be as resilient as

possible. Tom Paybody provides an update on contract farming returns for the 2018 harvest.

Some already have a strategy in place for the next 25 years, and are well prepared for the challenges ahead. We feature in this issue an inspiring account of landlord and tenant working together in Cheshire, on a major dairy expansion.

I hope that you enjoy this latest edition of AgriView.

David Merton 07770 333331 david.merton@fishergerman.co.uk

Harry’s view

When I look back at my thirty years or so in farming, the thing that surprises me most is how little has changed. Of course, farms have got larger, kit has got bigger and shinier, and there are far fewer people working the land.

However, most of us are doing pretty much the same thing now as we were doing in the 1980s. I am absolutely certain that, in the unlikely event that I am still around in 2048, UK agriculture will have changed beyond recognition.

Another major reason for the lack of innovation and entrepreneurship in the industry has been the CAP, which, for reasons we all know, has kept many marginal businesses afloat and been a barrier to innovation and structural change. Add to that the low return on capital deployed in farming, the difficulties and complexity of the supply chain – which itself has changed beyond recognition – and the risk profile of new ventures, and a simple wheat rape rotation becomes very attractive.

Why has change in our industry been so slow at a time when everything else has changed so much, so fast and the pace of that change only ever seems to accelerate? One of the answers is in my opening sentence: despite my thirty years in farming, I am still ten years younger than the average farmer. I hate to be ageist but, as time goes by, we all lose some of our spirit of adventure. All my diversification, new enterprises and innovations were conceived in my 20s and 30s and are now either mature businesses or failures. I am now very firmly an old dog: risk averse, steady, and reluctant to learn any new tricks.

But all this is going to change and, like most things in farming, this change will be driven by factors beyond our control. We are confronted by Brexit, the end of direct payments, climate change, globalisation, food poverty, public perception of food and animal welfare. All of this will drive policy makers, processors, merchants and retailers in multiple directions, throwing up all sorts of unintended consequences, as the supply chain gets tighter (who would have thought that the brewers would run out of CO2, and subsequently beer, in the hottest summer since 1976?). The changes that confront us are myriad and complex,

and their effect is going to be keenly felt by us farmers who have lost the insulation of subsidies.

So what’s to be done? Firstly, embrace change; it’s coming, like it or not. Secondly, look hard at your farming business and see if it is sustainable in its current form – you can do this simply by taking your subsidy away from your average farm profits over the last five years, and if you are not returning at least 10% of turnover, it probably isn’t. Thirdly, work out what you do next; your options will vary from engaging a contractor, through a fundamental review of the business (the answer may not lie in food production) through to exiting the industry but whatever you do, do not do nothing.

Harry Cotterell OBE, Chairman of Fisher German harry.cotterell@fishergerman.co.uk

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Innovation in partnership

4

Photo: Michael Trevor-Barnston

Farming for the future in the most environmentally friendly way possible is the ethos at the heart of a major dairy expansion in Cheshire.

The farm calves all year round; the breeding programme is overseen by animal genetics specialist Genus and there is a purpose-built maternity unit.

Since the spring, 1,000 cows have been getting used to a state-of-the-art rotary milking parlour installed at Crewe Hall Farm near Farndon, the hub of a major investment programme. The farm is owned by the Barnston Estate, and the innovative project is a partnership between the Trevor-Barnston family and tenant farmer Evan Jones.

The enterprise is a world away from the format of one farmer doing many jobs such as the accounts, agronomy, milking, calving and computer records, with the belief that moving from a ‘ jack of all trades’ to a specialist approach benefits cow welfare, increases efficiencies and improves farm safety.

The seeds were sown five years ago when Mr Jones approached the Estate about taking the farm forward.

It’s a strategy for the next 25-30 years, to hand on to the next generation by investing in technology and working with the tenant farmer.

Several years of talks followed between the two families and Rachel Kirk, senior associate at Fisher German in Chester, along with community consultation. Then came a year of planning and 18 months of construction to build a new 5,000m2 shed to house the extra 600 cows, a new access road for milk tankers, a new 60-point rotary milking parlour, a halfmillion-gallon reserve water lagoon and an 8-million-gallon slurry lagoon.

Estate manager Edward Trevor-Barnston said: “It’s a strategy for the next 25-30 years, to hand on to the next generation by investing in technology and working with the tenant farmer. Evan has been with us for 11 years; he came to us as a 25-year-old with one child and was milking 130 cows – 10 years later he has four children and by Christmas will be milking 1,100 cows. He has won many dairy awards, his herdsmanship is fantastic, and he sits on the coveted Tesco Sustainable Dairy Group representing 650 farmers.”

The business is structured around the Estate owning the land and buildings, while Mr Jones owns the parlour. Giving him certainty in relation to this, he has an FBT with a new 25year lease.

When the farm milked 400 cows, milking took up 18 hours a day; now two men can milk 350 cows an hour. Milking takes place three times a day to produce 12 million litres a year, and the average yield is 35 litres per cow per day.

The aim is to achieve huge economies of scale in producing over 12 million litres of milk a year with the help of technology and a focus on genetics, welfare and feed. The farm has a valued Tesco milk contract; fulfilling it requires ongoing submission of comprehensive data including details of cow welfare, feeding programme, litres of milk per cow, lameness and mastitis records.

“Tesco can come on-farm and conduct spot checks any time they want to ensure high standards are always maintained for both cattle and the consumer,” said Edward.

Crewe Hall’s aspiration is to be almost carbon neutral, avoiding a build-up of chemicals.

Edward is keen to see if they can produce near carbon-neutral milk, which he feels would offer opportunities to create new milk lines and add value, whilst protecting the valuable milk contract. He feels that brand and reputation are key to sustainability, with public perception of farming a crucial element.

The next step is to enhance the farm’s Alltech E-CO2 rating through renewable energy and initiatives such as tree planting. Edward believes that by maximising the marginal gains of improvements, enormous differences can be achieved. “For example, if we put in an Anaerobic Digester (AD) to take 20,000 tonnes of slurry a year, it will put our rating up to an A and we are drawing up plans for a 160kW slurry-only digester,” he explained.

The AD, a joint venture with Freshfield Energy, will run as a separate company in parallel with the farm, with Edward taking a 50% share. It

I’m passionate about farming, and have a love of the countryside; it’s what I grew up with. I saw an opportunity to shape our own family direction and that of the Estate.

will be installed over the autumn and will power the farm’s entire energy needs, converting waste into biogas and then electricity, turning a liability into an asset. Capturing slurry into a covered, sealed digester will reduce emissions and the digestate produced will be spread on the fields, reducing fertiliser costs and being better for the environment. A separator will remove bedding sand from the slurry, which will be recycled and returned to the cubicles, all adding to the drive for self-sufficiency, with fertiliser, fuel and feed produced on farm.

Investment in the AD is expected to be paid back in five years’ time.

Before returning to Farndon, Edward had a six-and-a-half-year army career, leaving as a captain in the Commandos, followed by a career in finance as an investment manager.

Both careers have proved useful in his current role; whilst the army gave him leadership skills and experience of project management, his career in finance involved analysing risk and reward of investment and asset management.

What brought him back home?

“I’m passionate about farming, and have a love of the countryside; it’s what I grew up with. I saw an opportunity to shape our own family direction and that of the Estate,” he said. “I’m a closet farmer really; I want to invest in the farm and see it prosper. We are creating a symbiotic approach benefitting farmer, livestock and land.”

He sees the future of estate management as creating minimum environmental impact while maximising outputs, alongside the increasingly important preservation of natural capital such as soil and water.

Written by Gill Broad

Rachel Kirk 07919 693398 rachel.kirk@fishergerman.co.uk

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Farmland market

Farmland values continue to widen across most sectors with arable values ranging from £6,250 to well over £14,000 per acre.

We expect rollover, lifestyle and non-farming investors to represent a greater proportion of the buying market in 2019…

After a slow start, 2018 has seen an increase in the volume of land marketed against 2017 as we approach the year end. It caught up dramatically in the second quarter of the year, pulling ahead of 2017 as we entered the summer months.

We do not envisage the farmland market reacting adversely to the details released so far. The wait and see approach, seen across the marketplace for the last two years, will continue and the market should remain calm in the short term.

By the end of June the volume of land publicly marketed regained a similar position to the same point in 2017, with circa 70,000 acres openly marketed across England.

Looking ahead, the proposed environmental land management contracts contained within the Bill will have a greater tangible effect on the marketplace, as details of funding levels and associated management requirements become clear.

With around 30% of farms advertised last year still available or withdrawn from the market, we continue to see transactional evidence support strong values, albeit clearly not a true reflection of the current marketplace.

Farmland values continue to widen across most sectors with arable values ranging from £6,250 to well over £14,000 per acre. Pasture prices continue to range dramatically across the country, ranging from £5,000 to £11,500 per acre. Quality and scale, but most importantly location, are dictating these price differences.

As trade negotiations with the EU continue we await some indication of likely tariff changes for both imports and exports, the results of which, along with the Agriculture Bill, will almost certainly have a tangible effect on the farmland market.

At the time of writing Michael Gove has just introduced the Agriculture Bill to Parliament. The Bill, the first of its kind since 1947, aims to deliver a clear structure for future farming policy post Brexit. Whilst detail is awaited around specific policy and levels of funding available, what we now have is an early template which will go some way to helping farming businesses plan for the short term.

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Demand for land remains fairly static, with buyers being generally more selective. Good quality cereal farms are gaining most interest.

Conversely, mixed and livestock farms (most notably dairy holdings) have seen a fall in interest, especially where scale and location are not in line with buyers requirements, or where local demand is weak.

The pressures on fodder reserves after a very warm and dry summer have dampened demand from livestock buyers across the country who will be more concerned with cashflow and livestock prices than increasing acreage over the next 12 months.

According to our research, demand has risen for smaller arable farms of 200-400 acres, where existing farmers and landowners can combine additional acreage into their current operations without the need for significant investment in new machinery and labour resource. Consequently, interest in medium and larger-scale farms has fallen as buyers attach a higher risk profile to such investments in today’s market, with

farmers citing a lack of clarity on future agricultural policy and support as the main reason not to invest unnecessarily.

accounting for what many buyers perceive to be a greater risk.

Farmers still remain the highest proportion of buyer type, accounting for about 50% of purchasers according to our research. We are seeing interest from the in-hand farming buyer falling, whilst interest from non-farming investors and lifestyle buyers continues to rise along with interest from rollover buyers. All of these buyer types are location driven, and the main reason cited for buying is expansion of existing holdings closely followed by tax-driven motives.

We expect supply of land to the open market to increase steadily and predict a further increase in supply in 2019.

Values are likely to remain under pressure across all regions with the greatest pressure on pasture values over the next two years.

We expect rollover, lifestyle and non-farming investors to represent a greater proportion of the buying market in 2019 and until further detail is provided on the proposed environmental schemes under the Agriculture Bill.

Institutional interest in farmland remains static, accounting for about 8-10% of purchases according to our research.

Such interest has been and will continue to be directed towards more strategic and well-diversified holdings where the risk of commodity price fluctuations can be mitigated against additional income streams and future hope value.

Buyers are generally favouring farms with additional strategic value and with alternative income streams. Farms with additional residential or renewable energy incomes are attracting more interest, as are those with shorter-term strategic potential through barn conversions for residential or commercial use and where sporting or leisure activities can bring additional revenue. Bare land holdings and those farms with no alternative income potential are less favoured, and in many cases are attracting offers well below expectations,

Debt and retirement-related sales continue to increase.

Interest rate rises and increased borrowing costs, along with the reduction and eventual removal of direct subsidy payments, have pushed some businesses to raise capital in the short term to protect against future income disparities.

This generally sees smaller blocks of land offered to the market to balance accounts and reduce borrowing costs.

We have also seen, in the last six to 12 months, interest from farmers close to rollover buyers offering land privately where a substantial premium can be achieved. We have handled a number of off-market deals where farming businesses have benefited from sales of part or entire farms to some very strong buyers with rollover funds. We estimate an additional 25% of openly marketed land is trading privately each year.

We expect supply of land to the open market to increase steadily and predict a further increase in supply in 2019.

Richard Gadd 07966 481487 richard.gadd@fishergerman.co.uk

7

Dramatic growth in AD plants

Fisher German understand the AD market well. Earlier this year we completed the sale, as joint agents with BCM, of a largescale biomethane AD plant on behalf of the original consortium of farmer investors to a major investment firm.

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Over the past five to six years the number of farm-based Anaerobic Digestion (AD) plants in the UK has grown dramatically to over 300 plants.* According to the Anaerobic Digestion & Bioresources Association (ADBA), total UK AD plants now have a generation capacity of 861 MW electricity, powering 1.2 million homes – an increase of 20% between July 2017 and 2018; 12.8 TWh per annum of biogas is generated by the AD industry, with 4.3 TWh per annum of biomethane-to-grid.

Initial growth was mainly in the 499kWe farmscale plants, using energy crops grown on farm together with chicken litter, dairy slurry and other manures. The best of these plants were fuelled with a mix of inputs, using the heat generated to heat broiler houses, for processing heat or other commercial uses.

A whole new sector of rural work has been created to service these plants, from their operation to the repairs and maintenance and the supply of feedstocks and application of the digestate.

Demand is growing for “green gas” to offset the carbon footprint in energyintensive industries…

The reduction or degression of the Feed-in Tariff and Renewable Heat Incentive (RHI) between 2014 and 2016 meant a dramatic reduction in the incentives to generate electricity on farm.

Unlike solar PV, this hasn’t led to proportionate reductions in the construction and maintenance costs, and mainly waste-based AD plants became viable.

The RHI support was introduced for biomethane production after the Feed-in Tariff and was initially sufficiently attractive to drive growth in generally larger plants. These plants produce biogas from similar feedstocks, but rather than being used to fuel a CHP generator the biogas is cleaned and compressed to produce biomethane which is then injected into the national gas grid network. The advantage of this is that all the energy is then consumed where it is required via the gas mains.

The biomethane sector is still developing.

Demand is growing for “green gas” to offset the carbon footprint in energy-intensive industries, and increasingly in the road transport network for retail deliveries using gas-powered trucks: quieter and cleaner-running in city centres.

With the “reset” of the biomethane RHI and introduction of the Tariff Guarantee Scheme earlier this year, a tranche of projects that were on hold during 2017 pending the introduction of the new RHI are now getting closer to the commencement of construction.

AD plants have offered significant opportunities to farmers and landowners, whether from direct investment in the plants, leasing land to developers, taking a paid operational role or simply supplying feedstocks and taking digestate from them. They are complex operations to manage effectively and safely, but those who have managed it are reaping the dividends, particularly those who locked into the higher support rates.

Farm-scale plants have reduced energy costs in intensive enterprises, utilised waste streams and supplied digestate to fertilise crops. They have enabled economic uses for break crops such as maize, hybrid rye wholecrop and grass: not only reducing the impact of combinable crop price volatility, but also providing effective tools in the battle to control blackgrass.

The market for the sale and purchase of AD plants is also growing with a range of developers selling, and other investment funds (together with private investors) purchasing plants. Recently we have been involved in assisting with the purchase of underperforming

assets purchased by investors with a turnaround plan, as well as more successful businesses looking to capitalise on the market.

Fisher German understand the AD market well.

Earlier this year we completed the sale, as joint agents with BCM, of a large-scale biomethane AD plant on behalf of the original consortium of farmer investors to a major investment firm.

We spent almost six months of preparation drawing all the required documents together, resolving any outstanding issues. We offered the business to a select number of potential investors whom we knew were actively in the market. Following final bid offers, an exclusivity period was entered into and we, with their other professionals, helped our clients through a forensic due-diligence process. This culminated in a successful sale at well over the initial guide price, and a great return on the initial investment.

AD plants are complex businesses with a wide range of factors, from energy export capacity to feedstock supply agreements, affecting the demand for them and hence value. Ensuring that they achieve their potential requires careful planning in advance of putting them on the market.

* Source: Anaerobic Digestion & Bioresources Association

David Kinnersley 07501 720405 david.kinnersley@fishergerman.co.uk

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Benchmarking – contract farming returns

Forecast returns and results are showing significant variations…

The early indications for the 2018 harvest results on combinable cropping contract farms within our analysis are showing significant variation in output and returns.

Spring crops have been most affected by the drought conditions, with both spring barley and spring bean yields 50% below budgeted expectations in some areas. Increased prices have mitigated the reduced yields to some extent but in most cases a proportion of the harvest was sold forward before harvest and the peak of prices.

in previous harvests is wider than might be expected. As shown, in 2016, total output ranged from £687/ha to £1,308/ha and in 2017 from £894/ha to £1,565/ha.

Many of the contract farms with the highest output per hectare have some of the lowest input costs per hectare.

For the contract farming agreements in our sample the 2017 harvest was the best result for five years. As the graph shows returns are, of course, intrinsically linked to the price of feed wheat.

The range in input costs per hectare is influenced to a degree by cropping mix and situation, but the management of purchasing decisions has a significant influence. Many of the contract farms with the highest output per hectare have some of the lowest input costs per hectare.

There will be many agreements, particularly on heavier soils with a majority of winter cropping where the 2018 result will continue the upward trend. Others, with a predominance of spring cropping or lighter soils, will unfortunately show poorer returns than 2017.

Similarly, whilst we expect the variance for 2018 to be predominantly influenced by cropping and soil type, recent history shows that in fact the same contract farms tend to produce the highest outputs (and indeed margins) year after year regardless of cropping mix.

Whilst we expect the range in output per hectare to be exaggerated for the 2018 harvest, the extent of the range of results

These best performing agreements are usually those where there is a long-term commitment from both farmer and contractor,

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enabling both parties to implement practices to make long-term improvements to soil health and structure. The extreme weather experienced during the 2017-18 season has tested even the most resilient of systems, but it should come as no surprise that the best performing sites are those with well-drained heavy soils. These were able to cope with a wet winter without restricting crop root growth, which then enabled crops to buffer against the drought conditions experienced in late spring and summer.

As the graph shows, the returns to the contractor, even in the poor years of 2015 and 2016, have been £400 and £384 per hectare which would still allow for a small profit margin in most situations. Returns in 2017 of £477 per hectare represent a good year for contractors showing that there is merit in agreements being structured to incentivise good performance.

Returns to the farmer for the same period with the inclusion of subsidy payments have been £291 per hectare in 2015 and £299 in 2016.

2017 shows a sharp increase to £424 per hectare; and the forecast for 2018 is similar in most cases, with the average across the four years being similar or slightly favourable to Farm Business Tenancy (FTB) rents. In many cases the farmer is also supplementing

CONTRACT FARMING AGREEMENT RETURNS PER HA

£1,400.00

£250.00

£1,200.00 £200.00 £1,000.00 £150.00 £/t

£/ha

£800.00 £600.00

£100.00

£400.00 £50.00 £200.00 £0.00

2011

2012

Contractors return / ha

2013

2014

2015

Farmers return / ha

2016

2017

Subsidy / ha

2018* FORECAST

£0.00

Feed wheat price £/t Nov

2016 HARVEST RANGE OF INPUTS AND OUTPUTS PER HA £1,308.77 £1,200.00 £1,000.00 £800.00

their income with Environmental Stewardship income outside of a contract farming agreement.

The impact that Brexit and ensuing policy changes will have on the structure of contract farming agreements is uncertain. What is clear is that from a farmer’s point of view, entering into agreements with progressive contractors with high levels of attention to detail and the economies of scale to coordinate purchasing of inputs and employ the highest skilled labour and technology, will enable their farming enterprises to be as resilient as possible.

£687.95 £600.00 £403.59

£400.00

£230.12

£200.00 £-

£118.34 £38.87

£117.03

£111.64

2017 HARVEST RANGE OF INPUTS AND OUTPUTS PER HA £1,800.00 £1,600.00

£1,565.08

£1,400.00 £1,200.00 £1,000.00 £894.35 £800.00

Tom Paybody

£600.00 £400.00

07870 807236

£292.27 £200.00

tom.paybody@fishergerman.co.uk

£-

£154.56

£129.63

£33.51 Seed cost / ha

Spray cost / ha

£197.26 £85.30 Fertliser cost / ha

Total output / ha

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Brexit – analyse your strengths and weaknesses…

Time is now growing short for the government to seal an exit deal with Europe.

Fisher German partner, Richard Sanders, looks at what effects a chaotic exit might have, and how to mitigate them.

In previous commentaries on the subject of Brexit, we have focused on the likely effects on farm subsidies, farm output prices and the availability of labour.

We thought we broadly understood the principles of how Brexit would occur and have discussed some of the detailed aspects.

As we move nearer to 29th March 2019, a disruptive and chaotic exit from Europe looks to be more and more of a possibility, and farm businesses should plan for this possibility.

The immediate effect of this would be on product price, in that imported produce would become more competitive.

In this event, the UK would have to adopt World Trade Organisation rules. The immediate effect of this would be on product price, in that imported produce would become more competitive.

However, perhaps a greater impact especially for food products would be the disruption of movement of goods into and out of this country.

For most arable, beef and dairy producers this might be good news.

For pig and lamb producers, for example, this might be very bad news.

Those input products which we almost take for granted would become more expensive and may be difficult to source. Whilst most arable businesses could cope with delayed delivery of phosphate and potash fertilisers, to go without nitrogen fertiliser and agrochemicals would present a major problem.

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Farm machinery, as a consequence of a weaker sterling and higher logistics costs, would become even more expensive.

Whilst some of the above might seem alarmist, it points to a continuation of the current trend in farming whereby yields, performance and productivity are plateauing at best, while input costs and especially machinery costs are increasing at an alarming rate. Margins are only being maintained by increasing product prices, generated by a weak pound.

Unfortunately, this scenario must lead to further consolidation, so that fewer businesses can derive a reasonable return from a larger operation.

As suggested before, those businesses which will thrive in an orderly or disorderly Brexit will have to be:

• • •

v ery well managed

•

f ocused on reducing costs – especially machinery

•

a ble to attract and keep good employees.

w ell funded l arge enough to provide a living for the business owners, or diversified into a niche market

The recently published Agriculture Bill confirms previous expectation that the existing area-based subsidy payments

currently supporting the profitability of many farm businesses will be phased out. Although we await specific detail, our understanding of the proposals is summarised in the box on the next page. …those farmers who embrace new technologies and drive efficiency will succeed in a potentially challenging period.

We are increasingly involved in what might be considered to be the second stage of farm business consolidation, with larger businesses forming joint ventures so that they can drive down costs further, benefit from professional management and attract the very best operators.

We are also seeing an increase in businesses looking for succession advice so that the older generation can plan to be funded from outside of the business and/or the younger generation provide the energy and enthusiasm to build a viable business for the future.

Those farmers who take the time to analyse the strengths and weaknesses of their businesses, embrace new technologies and drive efficiency will succeed in a potentially challenging period.

Richard Sanders 07885 215972 richard.sanders@fishergerman.co.uk

Agriculture Bill – what we know so far It is our opinion that the UK government will continue to support smaller diversified businesses by way of capital and annual grants, but is less inclined to help the larger operator. This has now been confirmed in the Agriculture Bill which, whilst not yet definitive, gives us some clear signals in terms of the future of support payments.

agreements will run out, although it appears likely that HLS schemes might be extendable while the new environmental stewardship scheme is developed.

The present government has pledged to maintain funding for the life of this parliament so, barring a general election, this should be until March 2022.

An environmental land management scheme will form the basis of the new support arrangements, with focus on measurable public goods to include:

Capping of BPS payments could be brought in by 2021, with the savings achieved, redistributed. The most likely capping proposal is for tiered reductions initially as follows:

• over the last two years, 42% of farm businesses made a loss before drawings without direct payments, 16% made a loss after receipt of direct payments

• water and air quality

• up to £30,000 – 5%

• improving public access

• £30,000 to £50,000 – 10%

• maintaining important landscape features

• mixed farms, cereals, and particularly grazing livestock businesses are most exposed with direct payments representing between 79% (cereals) and 114% (mixed) of farm profit.

• £50,000 to £150,000 – 20%

• reducing flood risk

• above £150,000 – 25%.

• providing and enhancing wildlife habitats.

The remaining BPS allocations will then be progressively reduced to zero by 2028.

During the transition period, time limited funding will be provided to improve productivity, reduce animal disease and promote collaboration.

There is likely to be continued support for investments in equipment, technology and support for new entrants.

These payments are expected to be delinked from land, so that farmers can elect to retire but continue to receive the reducing basic payment, either as annual payments or a capitalised sum.

During this period, existing stewardship

The basic payment and an element of the existing stewardship schemes will be replaced by environmental and other public good schemes.

• soil health • reducing climate change

Changes in financial support will accelerate the consolidation and specialisation already occurring in UK agriculture.

DEFRA’s published statistics (which will have driven much of the proposed changes) state that: • 50% of all support is currently received by 10% of farmers • current greening requirements are expected to produce no measurable improvement in environmental or climatic performance

In its simplest form, support will be decoupled from land and moved to improving the environment, productivity and business resilience. Initially, this is likely to lead to rent reductions and an opportunity for progressive farm businesses to expand with a lower working capital requirement. If, as we expect, product prices continue to increase, land productivity will begin to have a far greater impact on rental levels and capital values.

(All the information above is correct at time of writing, early October.)

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Have you considered selling your property online?

Fisher German has launched a new online auction service and is predicting a huge increase in the number of people selling properties and land through eBay-style platforms.

The new auction system is up and running and has already recorded its first sale successes.

The platform is suitable for a wide range of properties including residential, commercial, agricultural as well as bare farmland, development sites and woodland.

The online auction is similar to the traditional auction method. Solicitors draw up the legal pack, the same traditional and online marketing methods are used, and sellers are able to agree a reserve price and the length of the auction.

Bids placed in the last five minutes of the auction trigger the timer to reset for a further five minutes, giving potential buyers ample opportunity to increase their offers and ensure that the maximum value is achieved for sellers.

We are predicting online auctions will become increasingly popular as people look for cheaper and more convenient options to buy and sell properties. Countries such as Australia and the USA sell significantly more properties by auction, and the UK looks set to follow.

Stuart Flint, partner at Fisher German, said: “We have always held traditional auctions, but we have chosen to launch our online platform in response to the needs of our clients.

“Online auctions offer a more flexible and less pressured environment, making it favourable to many buyers as it allows them to take more consideration over their bids.

“The platform can also reach a wider audience than the traditional auction room, with people being able to bid from anywhere in the world.

“Mistakenly some people consider auctions most suitable for distressed properties, but this method of sale is appropriate for so many types of property or land – from

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farms and areas of woodland to commercial properties and country houses – so has an extremely wide scope.

“Online auctions are an ever increasingly popular way of purchasing goods, so it only makes sense that the property sector keeps up with this trend.

“We are predicting an enormous increase in the number of people buying and selling properties and land on online auction platforms due to its flexibility, costeffectiveness, transparency and speed.

“Our new platform enables the firm to stay ahead of market trends and has a huge amount of growth potential.”

Stuart Flint 07501 720422 stuart.flint@fishergerman.co.uk

The platform can also reach a wider audience than the traditional auction room…

Meet the team Our 16 offices provide local experts in all these work areas. If you would like guidance on any rural property matters, please contact one of us and we will ensure you get to talk to the very best advisor.

David Merton

Stuart Flint

Head of Rural Sector – Estate management and strategic consultancy

Head of Agency Sector – Farms, estates and country house sales

07770 333331

07501 720422

david.merton@fishergerman.co.uk

stuart.flint@fishergerman.co.uk

David Kinnersley

Darren Edwards

Agribusiness

Sustainable energy

07501 720405

07918 677571

david.kinnersley@fishergerman.co.uk

darren.edwards@fishergerman.co.uk

Holly Parry

Charles Meynell

Valuation and general practice

Expert witness

07501 720416

07836 212307

holly.parry@fishergerman.co.uk

charles.meynell@fishergerman.co.uk

John Ikin

Kay Davies

Compulsory purchase

Planning

07887 627978

07733 124551

john.ikin@fishergerman.co.uk

kay.davies@fishergerman.co.uk

Ben Marshalsay

Richard Benson

Development

Building consultancy

07771 974322

07768 552827

ben.marshalsay@fishergerman.co.uk

richard.benson@fishergerman.co.uk

William Gagie

Richard Gadd

Minerals

Farm agency

07551 152691

07966 481487

william.gagie@fishergerman.co.uk

richard.gadd@fishergerman.co.uk

AgriFacts

AgriFacts September 2018

Your monthly roundup of news, prices and other farming matters

Market Comment ary

Vital information for you every month

It has certainly been worth in this publica a volatile few months since I last gave tion back at the conditions in Australia end of May. A combin my five pence below par and , much of NW Europe, ation the UK rapesee a drop in the size d market the UK and Scanda of drought that attracts imports. of the Russian wheat navia plus London wheat Wheat yields also will need to be priced at a level harvest combin seaboard, the futures markets varied hugely with ed to push Matif Wolds to levels for UK feed wheat the Eastern faring best. Neverth and chalky soils in Hampsh was briefly availab not seen since 2013. £200 per and ire and eless it is expecte marketing year tonne le in some regions mln mt and how before d that the UK crop the central South for the end of this markets have recovere markets fell back some £20 will fall below 14 With again be a net far below is a matter of some debate. d some importer and not poise as rumours from the top. Since then continue volumes have resurfac mov just of wheat. Large This means we will non-grad of Russia limiting might be ed. feed eme nt in ingredie export scale maize and thinkin ntsthe have ingvolumes agri been even other abo if shipped cultu into the utare to date and this other area ral land expa To add to the confusio reducin nding g as market, you is ongoing priced. The UK wheat s orUKrestr your n we have Presiden make the became bioetha land hold uctunol with China which more competitively sector ring t Trump’s mos has as the experien your ing, ongoing trade has impacted the A Standard t of thes price rise in wheat has dive business. ced tough dispute crop prospects rsifying Soy sector whilst trading Loan is desi far outpace conditiobusi one of the two e opportu We look ns US Soy and Corn An can help d the nitie relative plants is expecte gned spec writing. In addition excellent, with large crops expecte price you Agefor AMCimminen of ethanol and ness with its con d stoas ntsa for close long -term ifica tly. This will impact d at the time of the of to period for importing and Brexit looms ever larger on the AMC ‘mainte £25,001 sheet. on the demand . nance’ help you make solidation, diversificlly to help your farm horizon and the exporting agricult and is ava Standard Loan side of the UK wheat the most rules despite assuran or rural allow ural commodities are ilable for of balance s you of opportu ation or grow th ces from the UK far from clear, fixed or varia Government that plan and prepared Alternatively nities whe ble interest between 5 and to borrow from in good time before we will all be informeoptions.Where prices n they crop s, and 30 years go from here ratesison it is fair to say that the end of March d facility, whe , we can assist you open with a cho both but they are where up. to debate. the 2019. In stark contrast repayme Prices are good ice with secu sectors, is not ready agricultural sector, seeming nt or inter for years and re you can borr farmers demand situation they are for solid reasons. ly along with most ring a shor for Brexit The est ow from world and is set to tighten pay bac are not able to we are already only and other wheat supply t term flexi £30, the expectation this year and world clarify what levy, at k at network ble of big US yields, Corn stocks, despite tariff, phytosanitary,the point where traders of origin regulati of AMC Age a rate that suits 000 for a period of TimInShul will too. also ons will or won’t Europe labelling reduce your dham five the wheat and demand is nts for furth or country be applicable cash flow delivery from April increasing support prices , Yorks &balance sheet is finely balance to business transact er informat . Contact 1st 2019 onward North Mids for the medium understatement. ed for s. To say this situation d and this should our ion: term. is farcical is not an One 0778final point – the cure 5 2679 The UK harvest 44 for high around prices is nearly comple Holly Parr is high prices. Historica the world have te at be fair to say that y, Central shown a remarka lly farmers prices by planting the outcome, whilstthe time of writing and I think bly rapid ability more. There is no it would was expected to not react good to high pen for many, was better after the very hot, reason to believe tim.sagain and therefore crop huldham that this won’t hapdry weather we barley general @fishergerma 2019 prices are well worth ly seems to have experienced. Winterthan 0750 yielded well whilst 1 and quality varied close 7204 n.co.uk examination.

16 David Sheppard spring barley yields wildly, depend planted and whethe ing on soil type, Managing Director on when the crop r crops caught was a shower or two.

Anth onyll Agricult Gleade Oilseed rape yielded Mayell, ure holly.parr y@fi WesLimited t Midl

Straightfo

Month (ex farm)

Midlands

Sept 2018 Oct 2018

Big Bale Hay p/kg dwt

anthony.m £165.0 0/t ayell

£173.0 0/t

Red Diesel Big sq Baled Wheat

07836

646472 Feed Barley

£166.0 0/t

Johnny Cord

£174.00/t

Fuel/St raw/Silage

£167.00/t

07837 2089

Milk Data UK Farmgate Milk Price

£65.00tonne £75.00/tonne Finished Steers 367.40

shergerm an.co.uk

Oilseed Rape

Currency

@fishergerma £322.0 0/t n.co.uk

£/€ =1.1111

ingley, East £325.0 0/t Midlands

€/£ = 0.8976

£326.0 0/t

05

$/£ = 0.7760

Avg Monthly Price

johnny.co rding ley@ppl 28.56 fishe

Price 63.66p/litre

Straw

ms and rura l businesse s

ands

Feed Wheat £172.0 0/t

Nov 2018

rward fina nce for far

Robert Brow

ne, North

West

07501 7204 18 robert.bro wne@fishe Amy Huts

by, South

rgerman.co .uk

Central

07918 6775 68

rgerman.co .uk

Fertiliser

amy.hutsby@ fishergerm an.co.uk

Price

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AgriFacts is a summary of important agribusiness information that you can receive free every month from us and includes news, data and comment on a variety of subjects including: • current commodity prices such as wheat, barley and oilseed rape, together with futures prices • currency exchange rates • a round-up of information on EU agricultural legislation, CAP Reform changes as well as consultations • current prices for nitrogen and compound fertiliser, red diesel, straw and hay • dead weight prices for pigs, cattle and lambs

• cross compliance – key dates to assist farmers with adherence to DEFRA and Rural Payments Agency (RPA) regulations • commentary on world grain markets • top contract prices for milk • other topical news items pertinent to farming businesses including capital grants, taxation changes and UK legislation.

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