Rural Round-up Winter 2024 by fishergermanllp

Rural Round-up

Issue 01 Winter 2024

fishergerman.co.uk

2023 Rural Statistics Minerals

Average farmland values across England (all land types) (opinion-based) – 1980 to 2023

£10,000

£9,000

4Mt+

£8,000

£7,000

15Mt+

£/acre

£6,000

of aggregates sold from FGmanaged quarries for 2023

£5,000

£4,000

£3,000 £2,000

£1,000

of sand & gravel resources marketed for future mineral development/supply

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

£0

Year

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 20

Farm

FACTS

Harvest 2023 yields:

*Average from FG-managed clients

Winter wheat 8.25t/ha

Contract Farming Agreements (CFA) Comparative Harvests Harvest 2022 CFA returns:

Harvest 2023 CFA return forecasts:

Contractor average return

Farmer average return (not including BPS)

£284.76/acre £201.91/acre

£154.74/acre £31.09/acre

Winter barley 7.80t/ha

Harvest 2023 average fertiliser price (ammonium nitrate):

£639/t

Winter OSR 4.2t/ha

Farm strategy

for 2024

The exceptional rainfall so far this winter has put many farms under water and meant that most farms have had to adjust their plans for cropping and stock management due to flooding and waterlogging. With falling grain prices and the impact of the BPS cuts adding to the pessimism, the Agribusiness team have been spending a lot of time reviewing options with clients and how we can use the Sustainable Farming Incentive (SFI) to help manage financial risk and enable change to production systems. 2024 started as usual with the Oxford Farming Conference and Oxford Real Farming Conferences, and in this election year the Defra Secretary was keen to announce additional SFI options to address many of the scheme’s criticisms around supporting those in the uplands and rewarding existing good environmental delivery. The announcement promised an average increase of 10% for SFI and Countryside Stewardship (CS) agreement payment rates and an increased number of actions on offer with up to 50 new actions. Many of these are targeted towards grassland and moorland farms but include: A groforestry options at different planting densities – £248-849/ha pa A range of watercourse management options N o-till farming £73/ha pa M ulti-species spring/summer/ autumn cover £153-163/ha R obotic and non-robotic mechanical weeding payments P ond management P ermissive access options (CS)

Blending the existing and new options together can generate reasonable income levels, particularly for those who want to change their system to more “regenerative” systems and the flexibility of the three-year SFI agreements. It also presents opportunities to use options as more profitable alternatives to particularly spring crops in the rotation and build soil carbon for those wanting to take advantage of soil carbon schemes. While the BPS is slowly archived, it is important to remember to check the delinked payments statements and submit necessary challenges put into the RPA before the deadline at the end of February 2024. Most seem to be correct but there are anomalies, particularly where there have been issues around land mapping which will require rectifying.

Farming in the UK is going through another period of accelerated change. While it is easy to focus on the new ELMS schemes, it’s also critical to ensure that farming businesses are focused on the core areas of production and profitability, setting out strategies to take them forward in whatever shape or form that may be. Financial sustainability is the bedrock from which they can adapt and thrive. Our agribusiness team are here to help navigate farming businesses through the challenges ahead.

An update from

OUR EXPERTS Agribusiness

David Kinnersley

01530 410806

Important tasks over the last quarter have been to review the Harvest 2023 profit forecasts and the Harvest 2024 budgets. It is striking how much lower both are compared to Harvest 2022 when exceptional prices and an easy harvest generated extraordinary returns for farmers and contractors. The state of the crops currently in the ground – and some very brown fields – is focusing minds on the Sustainable Farming Incentive (SFI) and the potential to put options into the rotation to reduce financial risk and working capital employed. The Improving Farm Productivity Grant Round 2 opens in January and deadlines are short so the first quarter of 2024 is a good one to get on top of business planning and grants as required. There may be no need for a 2024 BPS application but checking the delinking statements is vital and challenging them with the RPA if required before their deadline.

Rural Property Management

Rebecca Ruck-Keen

01234 827118

2024 will continue to bring pressure for our rural property owners with further reduction in agricultural subsidy payments, potential tightening of standards for let property, allocation of land uses and an expectation to meet environmental targets. We anticipate that these changes will give landowners a chance to review the performance of their portfolios to ensure business reliance. If a general election brings a change in government, there are likely to be several adjustments to legislation that will affect rural businesses. It is important that rural business owners understand their current tax and liability situation in order to be reactive, should this occur. At Fisher German, we feel the uncertainty and change is an opportunity to ensure rural estates, farms and businesses are sustainably optimising the performance of their assets.

Renewable Energy

Darren Edwards

01392 314070

It has been a busy last couple of quarters of 2023 in the green energy and sustainability sectors, both in the UK and globally. Key developments include the Chancellor’s Autumn Statement (November 2023) with a new investment exemption for the Electricity Generator Levy and full expensing on all plant and machinery, including the 50% first-year allowance for special rate assets being made permanent. Then, at COP28 in December, key nations agreed to “transition away from fossil fuels in energy systems” with around 100 countries pledging to treble their use of renewable energy by 2030. With government policy so critical to industry activity, announcements and commitments such as these have been broadly welcomed across the sector and are important for improving investor certainty.

Natural Capital

Tom Beeley

01858 411227

Our Natural Capital team have been busy reviewing the long-awaited secondary legislation on Biodiversity Net Gain (BNG). Whilst this guidance provides some clarity on matters to do with the forthcoming legislation, it appears that the specific application of the law will fall to the relevant local planning authority where the development is situated. Our team are currently advising a number of clients on varying matters arising from the BNG legislation, helping landowners to explore habitat banking models as well as assisting development clients to work through delivery of their BNG needs on sites. Should advice be required on any matters arising from BNG or other natural capital queries, please let our Natural Capital team know.

Planning

Sarah DeRenzy-Tomson

01530 566578

On 26 October 2023, the Levelling Up and Regeneration Bill became an Act (knows as LURA), with the measures set out within becoming enshrined into law. This will, in time, mean substantial changes to the planning system. Significant changes will likely include the introduction of National Development Management Policies, reforms to the plan-making system and the introduction of Environmental Outcome Reports (EORs).

Agency

Richard Gadd

01295 226283

Supply of land and farms to the market increased in 2023, with demand more varied in H2 2023, due to anticipation of potential capital taxation changes, an impending general election and increased interest rates. 2024 has seen us make an early start for spring sales, preparing a number of land holdings and farms for sale. As ever, detailed due diligence early on will stand our clients in good stead when marketing commences. At present we have around 2,000 acres to launch across the West and East Midlands with further opportunities across the northern and southern counties. Values remain firm albeit we expect muted capital growth over the next 12 months. With further increases in supply expected, we await to see how the wide range of buyers in today’s market react to those early opportunities we launch in spring 2024. Farmland remains a key asset class of interest for many private and corporate investors. With existing inheritance tax reliefs and the emerging natural capital economy, we remain confident that this asset class will show great resilience in the medium and long term.

Strategic Estate & Asset Reviews

Ellie Savage

01905 459473

Rural business and property owners are understanding the importance of strategic planning to ensure their businesses are resilient to the increasing number of financial challenges as a result of legislative and regulatory changes. The current trend we are seeing is that many people are waiting for changes to be implemented before taking action, but we are advising farmers, landowners and rural property owners to plan for the future. One of the most robust ways of doing this is looking at how to maximise the value of existing assets based on where business owners want to be in the next 10 to 20 years, which means looking at the long-term goals and strategically planning the steps to achieve them.

The government is also progressing with guidance regarding the implementation of Biodiversity Net Gain with the publication in recent weeks of the statutory biodiversity metric, draft regulations and draft guidance. A draft Planning Practice Guidance (PPG) has been published to enable the industry to familiarise itself with the requirements ahead of commencement of the regulations and mandatory Biodiversity Net Gain in 2024. On 6 December 2023 new regulations increasing the costs of planning application fees payable to local planning authorities came into force. The regulations increased planning application fees by 35% for applications for major development and 25% for all other applications. The regulations introduced an annual indexation of planning application fees, capped at 10%, from 1 April 2025. Importantly, the regulations remove the fee exemption for repeat applications (the “free go”), noting however that an applicant will still be able to benefit from a free go if their application was withdrawn or refused in the preceding 12 months, subject to all other conditions for the free go being met.

Minerals

William Gagie

01530 410859

2023 has seen a reduction in sales of aggregates, mortar and concrete as the construction sector has felt the effects of higher interest rates, cost inflation and general nervousness in the economy. However, this came after several years of very strong sales with the result that operators are continuing to look to replenish their reserves and many of them are actively exploring for new sites at values which have seen significant growth post-Covid. Pressures on all operators, but especially cement producers, to reduce their carbon footprint and environmental impact have seen a number of acquisitions of recycling businesses by quarrying firms who are looking to highlight their “circular economy” credentials. We feel this trend is likely to continue, further encouraged by the rise in Aggregates Levy from 1 April 2024 – the first rise for many years. Operators are developing methods to recycle more and more material and minimise waste and this is a trend that shows no sign of slowing down as we head into 2024.

DEVISING A FORMULA

for family farming business success

Amid the pressures to ensure survival, produce sustainable food, adhere to regulations, and mitigate climate change impacts, the future of farming businesses is under scrutiny. We met Nuffield Scholar Peter Craven who, as part of his scholarship, explored the future of the farming business landscape and looked at how families can unite in business to evolve their priorities to protect themselves for the future. Farming is in Peter’s DNA; he was born into the fourth generation of a farming family in South Lincolnshire. He gained first-hand experience of the struggles a family farming business can face when managing family relations alongside the added challenges of loss of subsidies, market volatility, extreme weather conditions, labour shortages and rising input costs. Gone are the days when times were consistently good and profitability was high, making relationships within family farming businesses easy. Now rural businesses are facing significant policy changes, putting families and businesses under pressure to question the economic sustainability of their farming businesses. Peter said: “I wanted to focus on the people part of business, particularly our families and how we interact. The world is based on relationships with other people, and I wanted to understand how the people in the best family businesses operate. Managing a family business involves strategic planning, effective management practices, a mindset of continuous improvement, and a commitment to innovation. To do this, the family must come together, work together, discuss together, and make plans together.”

Peter explained: “Central to success is the cultivation of family relationships, collaborative decision-making, and future planning together which can be seen as a departure from conventional agricultural education. It is crucial to recognise that family dynamics underpin prosperity, and the role of trust is built through open, honest, and fair communication. Drawing from the best family businesses, a common thread emerges – the Family Constitution or Charter. This living document outlines the ‘why’ behind the family business, integrating history, values, and the founder’s vision. It provides a framework for decisionmaking, roles, responsibilities, finances, and conflict resolution. “Having an open dialogue enables the family to develop a strategy for the future which can often be a complex landscape for rural businesses to navigate through. There should be a combined effort to adapt to change so that the business can evolve, thrive and survive in an everchanging and challenging environment.” Peter visited 100 families in business, 15 countries and four continents to explore how the family, business and ownership can adapt and work together and learn lessons from mistakes which have been made by many other businesses over the years.

From those he met, he created some principles of greatness which had been demonstrated by those who had managed to find success as a family business. These included:

Vision and purpose – Define a clear and inspiring vision for the future of your

family farming business. Dream a little; this vision should go beyond financial goals and encompass the impact you want to make within your community, the environment, and the wider agricultural industry.

Leadership and culture – Develop strong leadership within your family and business, with clear roles and responsibilities. Cultivate a culture of teamwork, open communication, and shared values. Encourage innovation, adaptability, and a willingness to embrace change. People want to feel empowered and that they belong.

Strategic planning – Create a comprehensive strategic plan, outlining short- and longterm goals and identifying strategies, tactics, and timelines to achieve them. Explore market trends, technological improvements, and competitive advantages. Continuous learning – Stay informed and current regarding the latest agricultural

practices, technology, and sustainability developments. Invest in training for yourself, your family members, and key employees to enhance your skills and knowledge base.

Operational excellence – Focus on operational efficiency by optimising processes, minimising waste, adopting best practices, and regularly reviewing and improving your production methods, supply chain management, and distribution processes.

Innovation and diversification – Explore new crops, products or services that align with market demands and consumer preferences. Embrace innovation in precision farming, sustainable practices, and value-added products.

Customer-centred approach – Understand your customers’ needs and

preferences. Provide exceptional customer service and tailor your offerings to meet their requirements. Build strong relationships and loyalty within your customer base.

Financial management – Maintain a solid financial foundation by managing your

costs of production. Regularly review your financial performance, utilising benchmarking where possible and adjust your strategies as required.

Sustainability and environmental responsibility – Adopt sustainable

farming practices that minimise environmental impact. Challenge the status quo and consider conservation tillage, water management, and other approaches that align with your customers’ growing interest in sustainable products.

Collaboration and networking – Engage with other farmers, industry groups and

organisations. Participate in agricultural associations, conferences and trade shows to stay connected and learn from others’ experiences.

Adaptability – Adapt to changing market conditions as well as regulatory changes and technological advancements. Allowing the business to evolve and adjust its strategies is essential for sustained success.

In these difficult times, it is important to develop strategies that enhance the sustainability and success of the people, the individual farms, and the industry. Family harmony will play a vital role in the future of UK agriculture, a sector that, for the most part, is run by family businesses. Only by securing a great future for UK farming family businesses can we ensure future national food security in an uncertain global economy.

Cwmbran 10

23 Richmond Richmond

11Doncaster 11 Glasgow Glasgow

24 Stafford Stafford

12 Head Ofﬁ Head ceOfﬁce

25 ThameThame

13 Hereford Hereford

26 Worcester Worcester

10 ExeterExeter

Our offices Exeter

Glasgow

Head Ofﬁce Ashby de lade Zouch la Zouch 1 1 Ashby

14 14HighHigh Wycombe Wycombe

Hereford 2 2 Ashford Ashford

15 15Hungerford Hungerford

High Wycombe 3 3 Banbury Banbury

16 16Knutsford Knutsford

Hungerford 4 4 Bedford Bedford

17 17Liverpool Liverpool

Knutsford 5 5 Birmingham Birmingham

18 18London London

Liverpool 6 6 BuryBury St Edmunds St Edmunds

19 19Manchester Manchester

London 7 7 Chester Chester

20 20Market Market Harborough Harborough

Manchester 8 8 Cwmbran Cwmbran

21 21Newark Newark

Market Harborough 9 9 Doncaster Doncaster

22 22Newcastle Newcastle

Newark 10 10Exeter Exeter

23 23Richmond Richmond

Newcastle 11 11Glasgow Glasgow

24 24Stafford Stafford

Richmond 12 12Head Head Ofﬁce Ofﬁce

25 25Thame Thame

Stafford 13 13Hereford Hereford

26 26Worcester Worcester

Thame

16 7

1 12 20

26 13

3 25

18 2

Your key contacts Worcester

David Merton Head of Rural

Rebecca Ruck Keene Head of Rural Property Management

01530 410806

01234 827118

david.merton@fishergerman.co.uk

rebecca.ruckkeene@fishergerman.co.uk

Visit our website at

fishergerman.co.uk and follow us on social media:

/company/fisher-german-llp /FisherGermanLLP

David Kinnersley Head of Agribusiness

William Gagie Head of Minerals

01905 459427

01530 410859

david.kinnersley@fishergerman.co.uk

william.gagie@fishergerman.co.uk

Richard Gadd Head of Farms Agency

Darren Edwards Head of Sustainable Energy

01295 226283

01392 314070

richard.gadd@fishergerman.co.uk

darren.edwards@fishergerman.co.uk

/fishergermanllp @fishergerman