GFW Rural Focus - Summer 2024 by GFW LLP

Welcome

Welcome to the Summer 2024 issue of GFW’s Rural Newsletter. In this edition we provide an insight into the Extended SFI offer for 2024 and what opportunities are available for farms already in schemes.

We consider regenerative farming practices and how this can benefit your farm in the future. We also discuss some of the key factors that should be considered when making a decision about on-farm diversification.

With increased footfall on rural footpaths in the summer months, we discuss what is required by landowners when public footpaths and rights of way fall on your land.

We round up our Summer edition with a pre-harvest update on the grain markets and provide an insight into the livestock markets as the autumn sale season approaches.

Regenerative Agriculture | Page 2

Farm Diversification | Pages 6 & 9

SFI & Grants | Pages 4 & 5

Exploring the benefits of Regenerative Agriculture

Elliot Taylor | Partner

As a farm business consultant, direct drilling, cover crops, soil health and the phrase ‘regen ag’ are often the topics of discussion especially when the Sustainable Farming Incentive and productivity funding are encouraging these practices. ‘Regen Ag’ or to use its Sunday name, regenerative agriculture, is gaining momentum in the UK as a sustainable farming practice that focuses on restoring and enhancing the health of agricultural ecosystems. Unlike conventional agriculture, which often relies on synthetic inputs and intensive tillage, regenerative methods aim to improve soil health, increase biodiversity, and sequester carbon. So let us explore the various benefits of regenerative agriculture.

Improved Soil Health

One of the primary benefits of regenerative agriculture is the enhancement of soil health. Practices such as cover cropping, reduced tillage, and crop rotations help to build organic matter and improve soil structure. This leads to better water retention, reduced erosion, and increased microbial activity, which are essential for long-term agricultural productivity.

Some industry experts believe that soil erosion and degradation have become a significant issue in parts

of the UK due to conventional farming methods, regenerative agriculture offers a sustainable solution. Healthier soils not only support higher yields but also require fewer inputs, reducing costs for farmers.

Enhanced Biodiversity

Regenerative agriculture promotes biodiversity both above and below ground. By diversifying crops and integrating livestock, farmers create habitats for a variety of species. This increased biodiversity can lead to natural pest control, reducing the need for chemical pesticides.

It is said that regenerative practices can help restore ecological balance. Hedgerows, cover crops, and perennial plants all provide food and shelter for pollinators and other beneficial insects, contributing to a more resilient ecosystem and a form of natural pest control for arable production.

Carbon Sequestration

One of the most significant environmental benefits of regenerative agriculture is its potential to sequester carbon in the soil. Through practices like no-till farming, cover cropping, and agroforestry, carbon is captured and stored in the soil, helping to mitigate climate change.

The UK government has set ambitious targets for reducing greenhouse gas emissions, and regenerative agriculture can play a crucial role in achieving these goals. By increasing soil organic carbon, these practices not only offset emissions from agriculture but also improve soil fertility and productivity for the long-term.

Economic Resilience

Regenerative agriculture can enhance the economic resilience of farming businesses. By improving soil health and reducing dependency on expensive synthetic inputs, farmers can lower their costs and increase their profitability. Diversified farming systems are also less vulnerable to market fluctuations and climate extremes that the UK have experienced recently.

In the UK, where farmers face economic uncertainties due to global market pressures, regenerative practices could offer a pathway to more stable and sustainable farming systems going forward. Government incentives with the aim to enhance economic resilience, like the Sustainable Farming Incentive and productivity grant funding are available to encourage and support regenerative practices.

Regen Ag - Practical Considerations

Transition Period:

Shifting from conventional to regenerative practices can involve a transition period where yields may temporarily decline. However, research suggests that long-term benefits often outweigh these initial challenges.

Farming Characteristics:

Every farming system is different and can have varied cropping and differing soil types. It is important to consider that not all farming businesses will be able to adopt some regenerative practices.

Knowledge and Training:

Successful implementation of regenerative practices requires knowledge and training. Support from agricultural organisations, universities, and experienced farmers is essential.

Policy Support:

Government policies and incentives can play a significant role in promoting regenerative agriculture. Subsidies, grants, and technical assistance can help farmers adopt these practices.

Water Management

Improved soil structure and increased organic matter in regenerative farming systems enhance water infiltration and retention. This not only reduces the risk of flooding but also helps farmers manage water more efficiently during dry periods.

The UK, which has experienced both flooding and drought in the last 12 months, can benefit significantly from better water management. Regenerative practices reduce runoff and erosion, protecting waterways from pollution and supporting healthier aquatic ecosystems.

Conclusion

Regenerative agriculture presents a promising pathway for enhancing the sustainability and resilience of the UK’s agricultural sector. By improving soil health, increasing biodiversity, sequestering carbon, and enhancing economic resilience, these practices offer numerous benefits for farmers and the environment. As the UK continues to strive for sustainable development across all industry, regenerative agriculture is likely to become a cornerstone of agricultural policy and practice in the years to come.

The extended Sustainable Farming Incentive offer

Sarah Bramwell | Assistant Farm Business Consultant

From Monday 22 July, applications opened for the extended offer of the Sustainable Farming Incentive (SFI). The scheme will remain the same as the 2023 offer terms of a three year agreement, with payments made quarterly, and a rolling application window. The actions available will be a combination of current Countryside Stewardship (CS) options and existing SFI actions along with a handful of additional new actions.

Businesses can have more than one SFI agreement in place at a time allowing the majority of farmers to access the new actions available.

Popular new actions available under the Extended SFI offer

Action

SOH1: No-till farming

SOH2: Multi-species spring sown cover crop

BFS6: 6m to 12m habitat strip next to watercourses

AGF2: Maintain low density in-field agroforestry on less sensitive land £385/ ha

PRF1: Variable rate application of nutrient

PRF2: Camera or remote sensor guided herbicide spraying

GRH6: manage priority habitat species-rich grassland

BND1: Maintain dry stone walls

UPL1: moderate livestock grazing on moorland (maximum 0.16 GLU/ ha)

UPL7: Shepherding livestock on moorland (no livestock removal period)

100m

£20/ ha

£33/ ha

Opportunities to move from CS Mid-Tier, Higher-Tier and ES HLS agreements

Sally Heath | Senior Farm Business Consultant

Under the Conservative Sunak Government, earlier in 2024 it was announced that from September existing Countryside Stewardship Mid-Tier (CS MT), and Higher-Level Stewardship (HLS) agreement holders will be able to end their existing agreement early to apply for a Sustainable Farming Incentive (SFI) agreement. Existing CS MT and HLS agreement holders may also be able to apply for CS Higher-Tier (CS HT) this winter, dependent on eligibility, with the first agreement starting from early 2025. Existing CS HT agreement holders will have opportunity to apply for a new agreement if their agreement is ending 31st December 2024.

Existing CS MT and HLS agreement holders will be able to end their agreement either:

▪ at the end of your current agreement year and receive the full payment due for that year (subject to meeting the requirements of your agreement)

▪ before the end of your current agreement year, but not receive payment for the part of the current agreement year you’ve already completed

There will not be any requirements for your new agreement to be the same as or similar to the

agreement you’re ending. If you’re eligible to apply for CS HT actions, you may need specialist advice which you’ll normally get through Natural England or Forestry Commission.

The continual payment rate increases which have been applied to CS agreements (which are now applicable to SFI) have not been applied to existing HLS agreements. Like-for-like HLS options are now available to apply for through SFI or CS HT (eligibility dependent) and have increased payment rates.

The key to a good scheme is having options which work alongside your business objectives whilst providing the optimum financial return. Of the HLS schemes GFW have compared to the 2024 SFI offer and CS HT (if eligible) on a ‘like for like’ basis, the majority of comparable agreements have a significantly better return under a new scheme.

As this announcement was made during the Conservative Government, the change to Labour Government could impact scheme delivery in terms of its timing and procedure, and is open to alteration. Due to the disparity in payment rates between the SFI and CS HT schemes against existing HLS agreements it seems unlikely that the option to transfer out of a HLS scheme into a new scheme will not become available in the future.

Choosing the best farm diversification option for your business

Sarah Bramwell | Assistant Farm Business Consultant

Farm diversification ranges from small scale methods to reduce fixed farm costs, to large scale enterprises that make half of the business income. However, the umbrella that is farm diversification can seem like a mine field when it comes to deciding what will fit in best with your farm business.

There are four main areas that should be considered when choosing the best diversification option for your business:

▪ Preliminary expenses

▪ Labour

▪ Location

▪ Statutory requirements

Preliminary expenses are inevitable when it comes to the start-up of any business, often the scale of the intended start-up is a major contributing factor to

these costs. Starting on a smaller scale and adding value to the project is an ideal way to develop. Each year, there are various grants and funding available to support farm diversification projects, both nationally and on a local authority scale, reducing the likelihood that start-up expenses will inhibit the creation of a diversification proposal (grants and schemes vary between business sectors, location, and application dates).

Labour and staffing is another important factor that varies drastically between non-farm income sources – whether the project is going to be run with the current workforce, will require an increase in employees, or whether the diversification will require very minimal management. This aspect is very likely to impact the variable costs in the gross margins of the new business.

Area for consideration How?

Market feasibility

Technical feasibility

Financial feasibility

Conducting market surveys, analysing trends in the industry, and talking to potential customers

Determine what the unique selling point of your business is

Look at what skills and personal development may be required

Labour and training considerations

Assess whether you have the necessary resources (land, labour, capital, etc.) to support the new enterprise

Consider any additional resources you may need to invest in, such as equipment, marketing, or infrastructure

How much money is required to start the business and what sources of finance are available

Fixed and variable cost

Consider what price your customers would pay for your products or services

Insurance

Sales forecasting

How long will it take to reach breakeven point

Organisational feasibility

Location should of course be a key consideration. It is not only a contributing factor in terms of the consumer market that your diversification project is going to target. Location can also refer to the ability to connect to the national grid if you are turning towards the renewable energy sector, or, the likelihood of having planning permission granted based on proximity to neighbours or designations of the land such as areas of outstanding natural beauty or green belt.

Statutory requirements including planning permission, licences, compulsory certificates and insurance should be considered. While it can be temping to begin projects without considering this, it is important to factor in the legal requirements, which will lead to the long term stability of your business. For example, food hygiene certification, planning permission if your changing land use from

Licence requirements

Certifications such as health and safety

Contracts and policies that outline fees, cancellation policies, other terms and conditions

Planning permissions

agricultural, and insurance to protect yourself and business which your current insurance policies may not cover.

While it is clear there is a lot to think about in terms of choosing the right diversification project for your farm, there is a lot of support available in terms of knowledge, grants and funding to get you started. A full, and detailed feasibility study will help you create a thorough business plan.

On-farm diversification can be a feasible option for many farmers and help to increase profitability and reduce risk.

It is important to conduct a thorough analysis of the market, available resources, skills and expertise, regulatory requirements, financial viability, and potential risks and challenges before making a decision.

Pre-harvest market update

Archie Gray | Assistant Farm Business Consultant

The unfavourably wet spring saw a poor outlook for harvest 2024, however, the recent incline in temperatures and sun has seen rapid crop development and allowed some trafficability of land.

Despite buoyant grain markets in recent months, prices have slid from the highs experienced at the end of May. Harvest pressure from the United States and Russia has drastically increased world grain supplies in a relatively short period of time. The USDA has reported that 71% of the winter wheat crop had been harvested as of the week ending the 14th July, compared to the five year average of 62% at this point. In addition, Russian and American yields have surprised the trade being far higher than expected given the far from ideal growing conditions that the 2024 crop has been subjected to. Feed wheat prices are now looking in around the region of £185.00/t for harvest, with the usual post-harvest carries pushing the November price closer towards the £200.00/t mark.

The buoyant prices in sheep and beef markets look set to continue, although it is likely the market will experience an autumn dip in lamb prices as seen in

previous years. The supply of lambs coming forward in autumn 2024 looks likely to be tighter than 2023 with reduced stock numbers and lambs coming to the market at a slower pace than usual. Within the meat processing industry, the expectation is that lambs should not drop below £100-£110/head as a fat price going into the Autumn regardless of any increase in supplies in late summer/early autumn.

The breeding sheep outlook is a little more uncertain with the expectation that there will be fewer breeding sheep available for autumn 2024. Breeding stock producers may have given into temptation and cashed ewe lambs fat,12 months before they would get a payout for shearlings. There is however uncertainty surrounding the supply of cash available for fat lamb producers to reinvest in breeding stock, which could potentially be the key factor limiting breeding sheep prices this autumn.

On the beef markets, the industry expects the supply of cattle to slow significantly within the next month, potentially causing an acceleration of prices through the autumn and into the run up to Christmas.

Farm diversification and the planning system

Hannah Wafer | Associate

Farm diversion comes in many forms with some of the most popular including:

▪ Farm shops

▪ Wedding venues

▪ Holiday lets

▪ Campsites

▪ Renewable energy

▪ Workshop/commercial units

One of the first steps in considering diversification should be to determine if planning permission would be required and if so the likely chances of success. Most agricultural holdings benefit from some form of permitted development rights which can enable

the conversion of agricultural buildings to residential or a flexible commercial use. The benefit of using permitted development rights to diversify is that it should be a simpler, quicker and cheaper route to achieving planning permission. Likewise permission may be granted in locations which would otherwise be considered inappropriate for development.

The team at GFW can help and guide you through the planning process if you are considering diversifying, however we would recommend discussing planning as soon as feasibly possible. Early discussions will allow you to establish the best strategy to obtaining permission. Getting the strategy right from the start could save time and cost in the long run.

Public Rights of Way (PROW)responsibilities as a land owner

Alastair Lumsden | Senior Rural Surveyor

Where public footpaths cross your land, they must be clearly marked. In arable fields, a simple way to do this is by spraying a blanket herbicide along the route to kill an establishing crop to create a clear path. Other ways of marking the route could include driving along it, leaving tire-tracks would make the route more “easily distinguishable”. It may seem like extra hassle and a waste of seed and herbicide to identify the footpath, however, a reason to do this (aside from it being a requirement under the Rights of Way Act 1990) is keeping the public only on the parts of your land they have a right of way over.

As we saw in the COVID lockdowns when rural footpaths saw a much higher volume of traffic, what used to be single-track footpaths soon encroached into the field, causing damage to crops the public had no right to pass over. With a clearlymarked route, all we can do is hope the public use their common sense and enjoy the countryside responsibly with the footpaths landowners provide. Where a footpath follows a headland or hedge, the same requirement for it to be clearly marked also applies. There is the additional lawful requirement, not to plough or cultivate the footpath, and ensure a reasonably level and firm surface. Along headlands

the responsibility of cutting back ground vegetation lies with the local authority, although in practice, this is unlikely to take place.

When can a PROW be declared over your land?

For a PROW to be prescribed, the public must have used the path for at least a period of 20 years, where no physical boundaries have to be crossed, have been removed or have been taken down. The users of a path which is not a PROW must have not used it in secrecy or with permission from the landowner.

There are methods to prevent or deter the public from making their own path, and prevent the ability for a PROW to be declared over your land. This could include:

▪ Clear signage within your land ownership boundary that this is “Private Land” and that the public has no right of access over it

▪ Reinstating boundaries to physically keep the public off land where they have no right of way. This would be done at the cost of the landowner, however there may be grants or subsidies available (which should be made the most of).

News within the business

It was lovely to welcome so many existing and new clients to our stand at Northumberland County Show – the mud definitely didn’t seem to affect the turn out.

On the same weekend a number of our team took part in the Scafell Pike by Night challenge, fundraising for Macmillan Cancer Support. The gruelling overnight trek saw us raise more than £830 for this incredible cause.

Since then, we’ve also been out and about at Eastgate Sheep Show, Glendale Children’s Countryside day, and Elliot Taylor joined the line-up

Key dates for your diary

Grant Deadlines

1 July New hedgerow management rules came into force in May 2024. As part of this, the hedgerow management rules on buffer strips will apply from 1 July 2024.

1 July - 2 Sept if you missed the deadline for submitting your 2024 Countryside Stewardship revenue claim form without reduction, you can still submit a claim between these dates with a reduction in payment.

22 July Applications open for the 2024 Sustainable Farming Incentive offer, this will be on a rolling application window.

of speakers at Cereals 2024, discussing regenerative agriculture and opportunities to utilise it going forward in coherence with the SFI.

Our rural drop ins proved popular across our offices, our team discussing a range of topics from opportunities with schemes and grants currently available for farmers, to advice on long-term business planning and succession.

After such a positive start to the summer, we are also delighted to announce Sally Heath’s promotion to Senior Farm Business Consultant, which is very well deserved.

Sustainable Farming Incentive (SFI)

Standalone Countryside Stewardship Capital Grants