Agriview Spring 2022 by fishergermanllp

AgriView

Spring 2022

Food v Environment Overwhelming demand for farmland continues Diversification: From farming to filming

Rural update from Fisher German

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TO OUR NEW SERIES OF PODCASTS We’re on the road to net zero, and there are countless routes we can take to get there. In order to navigate the path, we need to know where we stand now, and predict where we’ll be in the future. Fisher German Talks, a podcast from Fisher German, aims to do exactly that. Each fortnight, we get together with experts in farming, biodiversity, sustainable development and more, to discuss topical issues and how they will impact the future of our industry. You can tune in to our podcast series on Spotify, Apple Podcasts, Google Podcasts, as well as other available podcast platforms. Just search ‘Fisher German Talks’.

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Welcome There is still a lack of certainty around future public funding within the industry, and the private market opportunities that Natural Capital might bring. At the time of writing, rising commodity prices and soaring input costs, fuelled by the conflict in Ukraine, have brought food security back into focus. Recent volatility looks set to continue; it is therefore essential that farmers and landowners work with the tools available to them, where possible maintaining an agile system that can be adapted to change and consider where appropriate alternative income streams. In this edition of AgriView, Charlotte Gore considers in more detail the conflict of food production and environmental resource protection, and Christopher Ussher gives his thoughts on the importance of

embracing the opportunities for rural businesses to diversify. The farmland market continues to demand more supply, with the previous disparity in value between the most and least productive land contracting, where there are offsetting and rewilding opportunities. We also have a farmland update from Richard Gadd.

David Merton Head of Rural Sector 07770 333331 david.merton@fishergerman.co.uk

We hope that you find the articles in this issue of interest. If you would like any additional information about any of the issues discussed do not hesitate to get in touch.

Food v Environment There has been much debate on the government’s focus for the agricultural industry, with subsidy changes appearing to promote environmental resource protection, climate change mitigation and habitat creation as priority over and above food production. In contrast the current Russia-Ukraine conflict has highlighted the importance of food security, and rising commodity prices off the back of supply concerns bring this debate back to the forefront.

DEFRA have recently unveiled plans to restore 300,000ha of wildlife habitat. Although this includes existing woodland and peatland restoration, this amounts to just over 3% of UK agricultural area; relatively low when compared to the (up to) 16.5% that was taken out of production through the set-aside scheme. A more ambitious goal of having up to 60% of England’s agricultural soil managed under environmental schemes by 2030 suggests a direction towards encouraging farming practices to be both productive and environmentally sustainable, for example the use of cover cropping, reducing inputs, replacing inorganic fertiliser with applications of organic materials, minimising soil movement and rotational diversity. However, there is a lack of clarity around future public funding within the industry, and the private market opportunities that Natural Capital might bring. At present the payment rates in the recently announced Sustainable Farming Incentive (SFI) soil standard, the first element of Environmental Land Management Schemes (ELMS), do not look sufficient to entice many farmers. Some will meet the requirements of SFI with limited changes to their systems. For others, the increase in input costs along with the future potential for additional private funding through a developing carbon market may provide the motivation to consider the principles of the schemes. The recent volatility in grain markets, together with the rising cost and precarious availability of inputs, looks set

to continue; farmers and landowners must work with the tools available to understand their margins and risk. It is essential to assess cost of production levels to drive decisions on cropping rotations, straw practices, forward selling grain, and use of inputs. Where possible, maintaining a flexible system that can adapt to changes in weather conditions and market pressures will be beneficial. While grain prices are at unprecedented highs, they have been outpaced by increases in fuel and fertiliser cost meaning that net margins are likely to be no better than in recent years, but cashflow risks are significantly higher. As we plan harvest 2023, farmers will have to make difficult decisions about the working capital required to fund viable crops. The Countryside Stewardship window is now open for this year and will open again next year for the last time. There are a number of options that work well within a productive arable and mixed farming system. Options such as GS4 (herb and legume-rich grassland at £358 per ha), AB15 (two-year sown legume fallow at £569 per ha) and SW6 + AB14 (winter cover crop at £124 per ha + harvested low input cereal at £236 per ha) look particularly attractive options whilst fertiliser is over £700 per tonne.

Charlotte Gore Associate Director 07785 425317 charlotte.gore@fishergerman.co.uk

Supply remains constricted with ever-growing buyer demand Early discussions with buyers this year reveal an overwhelming demand for almost every farm type across the country.

2022 market – Farm/land value predictions by farm type (opinion-based) Arable Livestock Mixed Dairy Lifestyle/amenity Estates/sporting Woodland/forestry

Supply of good-quality large-scale farms across the country, and across the East and West Midlands in particular, has been severely restricted in recent years. Where such opportunities do arise, we are seeing fierce competition and some eye-watering values paid. Tax-driven ‘rollover’ buyers are leading the drive for larger-scale commercial farm opportunities. Demand from corporate and private nonfarming investors continues to grow in the developing market for carbon investment,

offsetting opportunities and rewilding. Opportunities providing larger-scale conservation prospects remain in similar demand. These buyers are generally seeking larger-scale upland and hill farms resulting in considerable interest for those poorer, less productive land holdings which may be more susceptible to reducing direct payments over the coming years. Non-farming, lifestyle and amenity buyers continue to drive demand for smaller residential farms and bare land opportunities. The majority of smaller residential farms offered by Fisher German

The marketplace is clearly demanding more supply this year and we anticipate greater transactional activity.

through 2021 saw unprecedented viewing numbers, resulting in multiple cash-funded offers from very genuine and proceedable parties. The marketplace is clearly demanding more supply this year and we anticipate greater transactional activity. With more retirement sales, the need to raise capital for diversification projects, debt-related sales and some rebalancing of investment portfolios, we expect supply to improve. We are likely to see some farmers considering the lump sum exit scheme, where appropriate, and inevitably this will result in some additional supply. With the recent surge in commodity prices providing welcome news across the industry, this must be balanced against rising input costs and continued inflation. However, we believe many buyers will see opportunity across the marketplace with a greater focus on domestic food security and shorter supply chains.

Quality, scale and location will continue to dictate values for farmland and, where rollover buyers and amenity or lifestyle purchasers are active, values should remain strong. We expect little movement in average arable values through 2022, with some upward movement for the most accessible and better-quality opportunities.

taxation changes and current demand levels. Many of our vendor clients have been surprised to hear of values transacted in their locality from both openly and privately marketed farms and land holdings.

Grassland values look set to increase where there is potential for woodland planting and afforestation.

Our predictions for the year ahead:

Interestingly we are starting to see the previous disparity in values between the most and least productive holdings contracting. The interest and values paid for poorer holdings suitable for afforestation and environmental-led opportunities are, in many areas, strengthening and as such raising average values for those previously less attractive land holdings.

• C ontinuing focus on opportunities for carbon offsetting

Not all available land will be openly marketed. A good proportion of trading this year will take place through private transactions, often hidden from the marketplace and thus not truly reflecting the volume of land changing hands.

• G reater non-farming interest in land for investment and diversification purposes

Where vendors require discretion and flexibility around their sale, such private marketing campaigns can work effectively. The assurance of maximum sale receipts cannot however be truly established without public marketing.

• C ontinued demand for strategic and well-diversified holdings

Where farmers and landowners are seeking to exit the industry over the next few years, they should take early advice. We recommend discussions are held to consider the opportunities and threats of declining BPS payments on farm profitability, input costs, potential capital

• I ncrease in supply of land to the market •C ontinuing demand for residential farms and amenity farmland

• I ncrease in demand and values for land suitable for woodland planting

• I ncreasing off-market activity

Richard Gadd National Country Agency Team 07966 481487 richard.gadd@fishergerman.co.uk

From Farming to Filming Diversification can help generate substantial additional income streams for both country estates and farm businesses, so capitalising on opportunities can prove extremely important to any rural business. Fisher German has recently welcomed Christopher Ussher as a consultant. He has a wide range of experience developing and growing businesses and assisting and advising on a number of country estates, with a particular focus on diversification, planning and fundraising. He was previously Chief Executive at Harewood House Trust and Resident Land Agent at Harewood Estate for 25 years, and played an integral part in developing the business. Christopher advises that a key part of any diversification is to identify not only initial opportunities, but also secondary ancillary businesses to bring in further income. He said: “A positive diversification for any estate is the reuse of redundant listed farm buildings. “On the Harewood Estate we had a range of 18th-century stone buildings geared towards 18th-century agriculture which, due to the size of modern machinery, were unsuitable for use in modern-day agriculture. “Although listed buildings can bring complexities, a feasibility study identified that they could be converted into modern, fully facilitated office spaces, attracting businesses looking for a picturesque location out of busy town and city centres. “In total, 15 offices were created; and although converting listed buildings was a difficult process, we found that once you have a track record of success the process becomes easier, so someone with previous experience can provide invaluable advice. “Once converted it was then important to look at adding value through secondary business opportunities and how to make the most of these. “All of the offices required a cleaner, so we were able to set up our own cleaning business. This is something which can be sold as a separate contract or can be included within the rent, but it is important to ensure the contract terms include you as the provider rather than giving occupiers the opportunity to bring in external contractors.

“We also offered sandwiches and refreshments at lunchtimes to bring in another income stream, both of which meant we were able to bill for other heads of invoice.” As well as redundant buildings, energy is another diversification opportunity which can bring in a secondary income. Christopher added: “As biomass boilers became more popular, we soon realised that we could not only heat the buildings used by the estate, but also sell heat to the cottages and offices on site. “This provided a fantastic business as all of the cottages and businesses came to us to buy their energy rather than other providers. “There is a wide range of ways to generate energy, any of which could provide business opportunities should there be a market, demonstrating that it is important to think wider than just bricks and mortar assets.” Television filming can provide a fruitful diversification opportunity for country estates, but in a crowded marketplace it is important to pitch venues correctly and make

connections which could bring the business closer to TV companies.

ensure there were seasonal plants and flowers in relation to the filming taking place.

Any larger-scale opportunities requiring construction may require planning permission which can also benefit both an estate and the wider community.

“But with so many estates registered on various platforms to indicate that they are open to opportunities, pitching a venue correctly is key.

While at Harewood House, Christopher played an integral part in the development of the Emmerdale television film set on the estate, and went on to secure filming opportunities with Heartbeat, A Touch of Frost and At Home with the Braithwaites.

“It’s about knowing the kinds of filming an estate would be suitable for by looking at elements such as what buildings there are, the period features and the scale of opportunity which the estate would be comfortable with.

Christopher said: “When we built Emmerdale Village we were at the cutting edge – nobody else was creating large television sets on estates at the time, and I was involved in all of the negotiations with Yorkshire Television.

“It helps to connect with someone with prior experience who can offer their support with this, address any concerns and reach out to contacts to further strengthen any opportunities.”

“It brought a lot of jobs, so when applying for planning permission I ensured that it was tied to the application that the development would secure jobs for the estate. “This meant we had full-time security guards for the set, pest control as well as a gardener who not only worked to maintain the gardens of the houses on set, but also worked to

Christopher Ussher 07468 860079 rural@fishergerman.co.uk

Telecoms Fisher German currently act for more than 6,000 land and property owners across the UK who have telecommunication radio base stations, radio towers, rooftop installations and mobile phone masts on their land and buildings.

Their reputation, knowledge and experience are invaluable when it comes to offering advice to landowners who often find themselves having to deal with situations outside their comfort zone. Combined experience of more than 50 years and a team of nationally experienced experts meant an initial enquiry from a landowner in Hertfordshire regarding the sale of a telecoms mast resulted in him receiving three times the original offer. In recent years, telecoms infrastructure has generated good income opportunities for farmers and landowners, but recent developments in the legislation mean that valuations have plummeted while telecoms operators have been given more extensive rights. In this case the landowner, who had received an unexpected offer from the potential buyer, Cellnex, contacted Fisher German to seek clarification. Although he was open to the idea of selling the mast site, he was unsure of the validity and trustworthiness

of the offer due to him having limited knowledge of current market values. During an initial consultation with Chris Hicks, Fisher German’s Head of Telecoms, the offer was reviewed, and available options were provided. Shortly after, Terms of Engagement were signed, and the potential buyer was approached on the client’s behalf. After a month of negotiations, Fisher German’s team was able to provide proof of the additional revenue streams claimed from the site and secure an offer of approximately three and a half times the original offer received. They were also able to secure a full undertaking of fees as the agent for the landowner as well as a further undertaking for the landowner’s solicitor costs in relation to the sale. The client accepted the much-improved offer which led to negotiations for the Heads of Terms. Despite a potential issue being raised with regards to the access rights to the site, the team ensured that the landowner would be protected and left at no greater prejudice from

the sale of the Freehold, the Heads of Terms were agreed and a recommendation to sign was made to the client in just four weeks. Having no prior experience in telecoms matters, the client was unsure whether their usual solicitor would have the necessary expertise to complete this deal, so the team recommended several alternative solicitors to them. The client said Fisher German provided the service in “a friendly, very timely, professional way, making sure there were no ‘nasties’ in the small print, and, most importantly, no hassle for us! We're very pleased with the overall service and result and would highly recommend them.”

Chris Hicks Head of Telecoms 07808 571067 chris.hicks@fishergerman.co.uk

Meet the team Our 26 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 Head of Rural Sector

Stuart Flint Head of Agency Sector

07770 333331

07501 720422

david.merton@ﬁshergerman.co.uk

stuart.ﬂint@ﬁshergerman.co.uk

21 8 15 6

1 11 17

David Kinnersley Agribusiness

Darren Edwards Sustainable energy

2 24

07501 720405

07918 677571

david.kinnersley@fishergerman.co.uk

darren.edwards@fishergerman.co.uk

16 5

23 9

Helena Tibbitts Valuation

Charles Meynell Expert witness

07918 628985

07836 212307

Ashby de la Zouch

Hungerford

helena.tibbitts@fishergerman.co.uk

charles.meynell@ﬁshergerman.co.uk

Banbury

Knutsford

Bedford

London

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Canterbury

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Newcastle

Cwmbran

Richmond

Doncaster

Rossendale

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Head Oﬃce

Thame

Hereford

Worcester

High Wycombe

John Ikin Compulsory purchase

Scott O’Dell Planning 10

07887 627978

07785 616659

john.ikin@fishergerman.co.uk

scott.odell@fishergerman.co.uk 20

Ben Marshalsay Development

Richard Benson Building consultancy 21

1 11

07771 974322

07768 552827

ben.marshalsay@fishergerman.co.uk

richard.benson@fishergerman.co.uk

4 25

24 14

/FisherGermanLLP

@fishergerman

16 5

William Gagie Minerals

Richard Gadd Farm agency

/fisher_german

07551 152691

07966 481487

william.gagie@fishergerman.co.uk

richard.gadd@fishergerman.co.uk

/company/fisher-german-llp

www.fishergerman.co.uk

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