Smiths Gore | NewsCast | Smiths Gore in Scotland | Issue 2

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a long way to go before we are out of the woods Toby Metcalfe t: 0131 555 1200 | e: toby.metcalfe@smithsgore.co.uk All generalisations are dangerous, and there are of course exceptions. I firmly believe that our rural sector is one exception that continues to break that mould.

Against this backdrop, and recent commentary that, far from clawing our way out of recession we possibly need to face up to a second wave, our Scottish Smiths Gore team is pleased to bring you this second edition of our Scotland Newsletter, NewsCast, and hope that it ‘hits the spot’ for you and your business. Land, water and energy, the essential building blocks of the rural sector are our continuing themes, and land is the focus for this issue.

The Westminster Government continues to struggle with the costs and complexities of the challenges facing the UK economy.

Huge uncertainty hangs over a wide range of sectors with many feeling the need for clearer leadership and direction. Some commentators suggest that the nation deluded itself in the run up to the crash and in many ways continues to delude itself now.

Given the scale of the problems we face this is understandable.

Europe, our closest export market, is in financial turmoil, and the future of the Euro remains in the balance. The national debate swings from deep and serious consideration about democracy, the need for fiscal control whilst achieving growth, to the credit squeeze and other macro issues.

Discussion over Scotland’s destiny and independence is headline news.

The general public meanwhile ask seemingly simpler questions about train times, road maintenance, the cost of food, the cost of fuel, the cost and availability of borrowing. All are important. Credit and cohesion are going to be the stuff of life for some time to come.

Against this we must reflect with some relief that the rural sector is presently faring fairly well. The level of agricultural borrowing has not grown in recent years, commodity prices are holding up for cereals and timber, the livestock sector after many years of moderate performance is moving forward, country sports continue to contribute to the economy due in part to strong runs of salmon into Scottish rivers and good grouse numbers, the renewable sector is growing fast but is not without its setbacks.

Forecasts suggest that these trends will continue for some time with demand growing and the Scottish Government setting ambitious targets for the export of food and drink, and growth in renewables. We all have a part to play in fostering economic activity whilst not losing sight of the fact that there are things that need to be protected – water quality, biodiversity, productive land, landscape, housing and, not least, jobs.

We are fortunate to live and work in such a resilient environment.

I hope you enjoy NewsCast. Please do feed back any comments, suggestions or ideas.

If you feel Smiths Gore may be able to be of assistance to you or your rural business please feel free to give me a call.

As we leave behind the first months of 2012 and thoughts turn again to Spring, shorter nights and new opportunities, regrettably uncertainty is in danger of prevailing.

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Just over 6 million ha of land is used for agriculture in Scotland. The total area farmed has dropped by 180,000 ha in the past 30 years - with forestry taking more than seven times as much agricultural land than housing and roads (source: Scottish Government)

25% rented

Rents have risen by 17% on average when reviewed since 2007 - with the greatest rise in the livestock sector

2007

Arable

Dairy

2011

Livestock

2007 2011

Mixed

£77/ha | £31/ac

2011

+17%

£67/ha | £27/ac

2007

£106/haa | £43/ac

£44/ha | £18/ac

2011

+14%

£94/ha | £38/ac

£99/ha | £40/ac

2007

£52/ha | £21/ac

£91/ha | £37/ac

+19%

£210/ha | £85/ac

+9%

£188/ha | £76/ac

+14%

The February Court of Session ruling on the Moonzie farm review case will encourage landlords considering serving rent review notices this Spring.

The Court said that rents should be agreed based on 'open market evidence' which means that higher rents will be agreed than in the past 3 years, when Moonzie suppressed rises to avoid litigation.

Source: average rents from Smiths Gore Agricultural Rent Database, which contains details of 200 Scottish reviews, over 95,000 acres

2007 2011

Scottish average

Growth in designated areas to protect Scotland's environment 1991

2001

2011

Sites of Special Scientific Interest – for animals, plants and geology Special Protection Area – for birds Ramsar Sites – for wetlands

804,000 26,000 14,900

958,000 476,000 304,000

1,023,000 1,296,000 313,000

Change in last 20 years +25% +4900% +2000%

National Nature Reserves – for areas of national importance Local Nature Reserves – for areas of local importance

112,000 3,000

116,000 9,000

134,000 10,000

+20% +250%

8,000

16,000

17,000

+120%

Hectares

Scheduled Monuments

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FOOD AND DRINK FOR THOUGHT Scotland Food and Drink delivering for the Scottish rural sector

Toby Metcalfe met with Ray Jones, Chairman, Scotland Food and Drink, to ask him about the important part that his organisation plays in driving Scotland’s food and drink sectors forward.

Collaboration is extremely important because we have so many different groups in the agricultural food scene in Scotland, and only sometimes are they all in tune. And it’s not just about producing barley, or beef, or fish, but about where that product is going to, and how we can get the best price for it.

TM: You have an ambitious target of 25 per cent growth from four years ago to 2017 – a 10 year period. How achievable is that?

Ray Jones: Scotland Food and Drink is now four years old, and was set up originally with the help of Government to combine the strengths of the Scottish drink industry, primarily whisky, with the strength of our food industry, and to try and bring a holistic approach right through from the primary producer, the farmer.

RJ: The good news is that by 2010 we had already achieved £11.9 billion, so we are already rewriting our targets.

But we are also trying to understand where that growth has come from, and a lot of it is from whisky which is now exported to well over 200 countries. But we need also to get our fish industry, and the wider food industry, up to a level that is truly sustainable and delivering good returns both to the processor and the farmer.

We have a target for the sector of £12.5 billion in revenue by 2017. Scotland Food and Drink is all about making the most of what this small country produces in a worldwide context.

TM: Fishing is an industry important to Scotland both culturally and economically, but can you tell me specifically what is happening in our salmon farming sector?

We are also about encouraging cooperation and collaboration.

RJ: Salmon farming is growing at around eight per cent per annum. Our salmon

Toby Metcalfe: Ray, perhaps you could just outline Scotland Food and Drink’s remit and where it begins and ends?

is still seen as the ‘King of Fish’, and it has a very high position in the market place, right at the top end – higher than Norwegian and Alaskan salmon.

It’s a hugely important product as far as exports are concerned, and the majority of it goes for export. In the first six months of 2011 we exported 2000 tonnes to China meaning that we had to pass up some of our markets in Europe – we couldn’t miss the opportunity in China, and the high prices we were being offered there. There are however some quite severe, long-term issues with salmon farming, where we work very ethically and environmentally, over creating new salmon farms to capitalise on growth and a worldwide revenue stream, since it has become increasingly difficult to gain planning permission for new farms. We are operating at capacity right now, but clearly we need to get on if we are to satisfy worldwide demand.

TM: And do you think Scottish agriculture is fulfilling its potential?

RJ: In the 13 years that I’ve been in Scotland I’ve seen Scottish agriculture become much more aligned, and with the Government we have now in power for the next four years, maybe longer, we have a golden opportunity.

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Toby Metcalfe t: 0131 555 1200 | e: toby.metcalfe@smithsgore.co.uk On the grain front, more malting barley is required for our whisky production.

TM: And do you think Scottish whisky can be produced from non-Scottish grown barley?

RJ: If we were to rely solely on Scottish grain and there was a disease issue, then that could wipe out the whole of our whisky industry at a stroke.

The bulk of our whisky is produced using Scottish barley, but we are also buying from England, and from Canada. The industry is also protecting itself by producing now and holding stock for three years, 10 years, 12 years and more.

TM: Turning to the livestock sector, are there any particular approaches you think we should adopt?

RJ: We currently have seen lamb reach a ceiling in terms of price in the supermarkets, and people are not buying it at the same rate as they used to because it’s become too expensive – but other countries will take our lamb at that price, and I think our farmers have a responsibility to supply both domestic and overseas markets.

I am concerned that we are not producing enough sheep meat now, although processors are now better at using the whole carcase because they have found new markets for the ‘fifth quarter’ overseas. Even so, we do need to create some new areas for sheep meat production.

When it comes to prime beef cuts, Scotch beef is doing really well and that market is growing – but we also have to be able to satisfy markets that are constrained by the economy.

People can’t always afford to eat prime beef – that’s not to say that the home market is getting sub-standard product. The meat we produce, whatever cut it is, is far superior than it was 10 years ago.

not all farms can sustain 600 – 800 cows in one herd.

TM: What are your views on land for food production or land for energy given your closeness to the industry and to Government?

RJ: We are very keen for farmers to become low carbon. There are areas where we could have more trees, and where we could do better at how we deal with waste, and at reducing costs. We have to become more selfreliant on our own industries.

Renewables are creating huge employment in Scotland, and that’s to be applauded, and there’s a long way yet to go for the oil industry. I would not go so far as to say that you can defend taking good grade arable land and putting trees on it.

TM: When do the alarm bells ring? When for instance with milk production does Government step in given the changes that we are seeing in the dairy sector?

TM: And a final word on your own organisation?

RJ: I remember someone telling me when I worked for Alfa Laval - there were 135,000 dairy producers in the UK at that time - that one day that number would drop to 25,000. And of course we are way below that now. We’ve reached a point where we really don’t want any more farmers coming out of milk, but we have to recognise that

RJ: We’re looking forward to our fifth birthday, and a lot of good things have happened over the last five years. I can say with confidence that Scottish agriculture, Scottish food processing, and the Scottish drinks business are all in better shape, and we are working hard to maintain that progress.

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CAP REFORM a quick update. . .

James Worthington You will no doubt have seen the ongoing and considerable coverage being devoted to CAP Reform in the farming press right now. Although we have a long way to go before the final package is agreed in 2013 at the earliest or perhaps even 2014, below is a brief summary of what we know so far.

The main issues to consider to help you to maximise your claim and to position your business under the new regime are as follows:

Base Year

If your trading business has claimed SFP in 2011 it will be eligible to claim under the new scheme, the Basic Payment Scheme (BPS).

Entitlements

The allocation of Entitlements is likely to be based on the area claimed in the first year of the BPS. The value of these Entitlements is likely to vary according to land quality/grading.

Active Farmer

To be eligible for Entitlements, claimants must meet the definition of an ‘Active Farmer’.

Capping

It is proposed that the BPS will be subject to progressive capping, ie no reduction below €150,000 but no payment above €300,000. However any potential reduction may be mitigated by the number of labour units employed.

Greening

A 30 per cent top-up to the BPS will apply (not subject to capping) for the retention of permanent pasture, 7 per cent set aside/environmental features and crop diversification (3 different crops on arable farms) under ‘Agricultural Practices Beneficial for the Environment.’

Although, not an exhaustive list of the elements of the new scheme, this gives a flavour of the proposals.

Obviously, at this stage, it is difficult to be more definite about what the new proposals might mean for any particular business since these may change over the interim period, but it would appear beneficial to maximise area claims in the first year of the new scheme, bearing in mind the influence that the ‘active farmer’, ‘capping’ and ‘greening’ proposals may have.

Is your annual fertiliser bill money well spent?

James Worthington t: 01387 263066 e: james.worthington@smithsgore.co.uk With the trend in fertiliser costs continuing on an ever upward spiral, although not yet back at the previous all-time highs of 2008, all producers should be asking themselves not just whether they are fertilising their land as efficiently and costeffectively as possible, but also whether they are applying the right product.

And, after one of the wettest summers on record, it would be wise to undertake some soil sampling to establish the amount of nutrients that have been leached from soils, and to check pH, phosphate, potash and magnesium levels.

If pH’s are below the optimum (typically 6.0 – 6.5 for grass and 6.5 – 7.0 for cereals) then it might be more financially prudent to correct the lime status in the soil first, before automatically applying the routine amount of bagged fertiliser.

The grade of lime spread will depend on the pH level, the following crop and the nutrient status of the soil, with low pH fields destined for spring cereals requiring a product with a faster reaction time than perhaps grassland where only a maintenance dressing is required.

If magnesium levels are more than adequate, opting for calcium versus magnesium limestone will be more appropriate, particularly if calcium levels are low.

The various types of lime can be classified by ‘neutralising value’ (NV), ‘fineness’ and ‘reaction time’.

Extreme variations in soil pH, both acid and alkaline, can result in trace element lock up, which will affect the performance of both livestock and crops. So adjusting the pH to the optimum level has to be the initial target, but it may not be possible to correct this overnight. Over-liming can bring its own problems (eg copper lockup with heavy dressings of magnesium limestone), so a phased approach with split dressings is usually best for very acid conditions.

Once the target pH has been achieved, a broad spectrum soil sample will identify which trace elements are still unavailable and have to be rectified, either by foliar application (in soils with good nutrient holding ability) or mineral supplementation.

A broad spectrum soil sample costs more, but will identify the availability of other major nutrients, such as calcium, sulphur, manganese, copper, boron, zinc and sodium - all vital components in protecting livestock and crop health.

Routine dressings of nitrogen, phosphate and potash must not be ignored as they secure the annual supply of grazed grass, fodder and crop for our farm businesses, but maintaining a healthy soil of optimum pH will ensure consistently good animal and crop performance.

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WANTED LARGE SCOTTISH FARMS John Coleman t: 0131 555 1200 | e: john.coleman@smithsgore.co.uk

According to our latest research figures published late in 2011, prime arable land in Scotland was currently averaging just over £5000 an acre with the higher end going for over £8000 per acre.

Average values in Scotland are continuing and will continue to edge up, mainly due to demand outstripping supply and the exceptional prices being paid for some properties. Some larger sales details are still awaited, but it looks like prices will be up by around 5 per cent year on year, despite the lower end remaining much the same at £3000/acre.

Although buyers of Scottish farms are predominantly local Scottish farmers, there has been an increase in interest from all over the UK. Our applicant database shows that a great number of prospective buyers from other parts of Britain, especially England, where prices have exceeded £10,000 per acre, have been looking at Scottish farms, no doubt attracted by the comparative value for money - particularly on high quality arable units. There is much demand for farms between £2m and £5m, but with so few farms of this size and value available it is obvious that demand will continue to exceed supply,

meaning that prices will continue to rise and making Scottish farms an even more attractive investment.

Less than 20 farms of over 400 acres were offered for sale in Scotland in 2011 although farms of up to around the 250 acre mark are less scarce. Smiths Gore has been particularly active in the north-east of Scotland with two Aberdeenshire farms selling well above their asking price - The Ward and Broadley Farm, a mixed arable and livestock farm with 259 acres and development potential at offers over £850,000, and Nether Hawkhillock, a well equipped livestock farm of 244 acres at offers over £950,000.

Smaller and more marginal farms will need to be competitively priced to sell quickly even though we know that there are budgets of up to £5 million available for the best land and equipped farms. Just because the average price is going up doesn’t mean that the smaller units can expect a premium, and sellers should be realistic in their expectations. On the other hand, I am predicting that larger farms in good condition can anticipate record-breaking prices this coming year.

Building surveys invaluable for buyers of historic properties or country houses Richard Henderson t: 01387 263066 | e: richard.henderson@smithsgore.co.uk Lenders may insist on a mortgage valuation being carried out on a property to ensure it is worth the money they are lending, but this valuation is never intended to be a detailed survey of the building and is unlikely to cover the property in the detail required to detect problems with it. In the case of a single house a Home Report including a ‘condition report/survey’ to a slightly more detailed level should also be available, but even this is unlikely to be adequate for an historic or significant country house.

Property is a significant investment and not without risk. The right advice is important before you commit to purchase, and going ahead and buying a property without taking advice from an appropriately qualified Chartered Surveyor is a risky business. Even so, many people do this every year, relying only on a lender’s valuation instead of having a more detailed building survey carried out.

We advise all our purchasing clients to invest in a detailed building survey of the property so that they can make a fully informed decision on the offer price, or indeed whether to proceed at all. Either way having the correct information can save a considerable amount of money.

Historic and Listed houses require particular attention and skills to understand the potential problems that may be encountered, pitfalls to be avoided and even costs that could be saved. But the most important aspect is to know

as much as possible before actually committing to a purchase.

Smiths Gore has many years experience in working with period property, and our surveyors have gained a significant understanding of the issues involved.

Recently we undertook a survey of a building that highlighted a significant dry rot outbreak that was far more extensive than originally thought. This information allowed our client to make a fully informed decision regarding their interest in the property.

With the more recent development of our specialist Country Estate Agency division, we are able to combine detailed purchasing advice and valuations with our historic buildings expertise ensuring that our clients are fully equipped to make informed decisions on major residential purchases.

Our teams of Buildings Surveyors, Estate Agents and Valuers work closely together offering our clients unrivalled expertise and experience throughout Scotland.

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Business diversification Matthew Currie t: 01387 263066 | e: matthew.currie@smithsgore.co.uk In this current economic climate, many businesses are rightly considering how to develop so as to attract new customers or to appeal to different markets. Smiths Gore, one of the UK’s leading firms of rural chartered surveyors and property business consultants, has itself over the years expanded its range of rural business services. Included within these is ‘Business Improvement’, which focuses on developing the capacity of rural business owners and their staff to compete and prosper in an ever-changing rural business environment.

Diversification can be an element of a business improvement strategy which takes a business into new markets with new or existing products or services, or into old, existing markets with new products or services. But, whichever of these two routes is taken, it is clear to Smiths Gore it must be treated as a new undertaking from the outset.

In terms of benefits, diversification can utilise successful products, management, know-how or technology in new markets; it spreads the risk of trading; it can increase total sales and profits; it can open up new markets; it can make better use of staff time, capital or resources; it can extend brand value to new markets,

customers and products; and can allow superior access to market information.

Mismanaged however, diversification can bring risks, negative impacts and unintended consequences including erosion of core business competencies and values; distracting staff and management; confusing customers; and creating cultural clashes between core and diversified business.

It is important therefore to recognise its potential dangers and the pitfalls.

One essential precursor to diversification is to undertake a ‘cost of entry test’ to assess whether the initial entry costs into new product or service lines will capitalise all future profits. This should be coupled with a ‘better off’ test to establish whether business development will increase profits and/or improve business competitiveness and/or business well-being.

Crucially it must be established whether the rate of profit will exceed the cost of capital deployed in the development process and beyond.

Richard Branson said: “if we (Virgin) hadn’t moved on, we would have been dead as a business, because music retailing was our principle business.”

Considered diversification requires understanding of the

key resources available to the business, applying clear logic to the process, and setting out certain market characteristics to increase opportunities for success.

Using the Virgin example, it might be said that available resources included the personal charisma of Richard Branson, the Virgin brand, and the company’s exceptional PR skills, entrepreneurial flair, and networking success.

In terms of applying clear logic to business diversification, some typical considerations might be to seek out markets where an innovative product or service differentiation would be valued or noticed, where consumers are underserved, or where complacent or inflexible incumbent providers exist.

Diversification is, of course, not just a consideration when markets are tough. Investing in a new direction is also important when it comes to capitalising on business success, but the same rules apply – understand key resources at the disposal of the business; apply clear logic to business development; identify those market characteristics that will increase chances of business success; and don’t lose sight of either the reasons for embarking on diversification or the inherent risks.

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© Andrew Gordon

. . .reflections of an event manager

Blair Castle International Horse Trials 2011 Sarah Butler t: 01738 552524 | e: sarah.butler@smithsgore.co.uk I entered the office of Scotland’s largest equestrian event with some trepidation.

Outside the blank canvas of the event field looked daunting and it was hard to imagine how what I remembered as a spectator from 2010 would be created again. The challenge was emphasised further since this year I was joining the Horse Trials team in the delivery of the event.

I arrived 109 days before the opening ceremony. Seemingly a long time but knowing that the end result would combine almost 200 trade stands, 1600 competitors, owners and grooms, 2000 horses, 500 officials and volunteers as well as the 40,000 or so spectators there was no doubt that a certain amount of co-ordinated organisation would be required. Added to the 2011 event was the prestige of hosting the FEI European Young Rider Eventing Championships, meaning that the best of Europe’s Under 21 competitors would also be coming from as far afield as Russia, Poland and Portugal.

It would be an understatement to describe the time between my arrival and the opening ceremony as busy.

Days were filled, working alongside Hannah Wilkins as Assistant Director, with co-ordinating contractors, liaising with event officials, dealing with competitor queries and promoting the event to the media, sponsors and other event supporters. In addition there was box office management, trade stand applications, entries and other financial reporting to enable monitoring of targets.

Questions about the weather were undoubtedly the hardest to answer.

Ultimately, we endured a mixed week with some heavy showers rendering parts of the site a quagmire, but warm sunshine over the weekend meant that most people went home dry.

Event week itself was a haze of adrenaline. Alongside the international three day event there were other showjumping and showing classes as well as the Bruadar Country Fair, so a quick change of focus was required from one area to the next to ensure that all the arenas were running smoothly.

Whatever best-laid plans were in place, there was always the unexpected to react to with composure and a smile however strange, difficult or unusual.

Prize giving at the end of the event was a bitter-sweet affair - jubilation that the GB Young Rider team had won team gold and individual silver medals, but also a huge comedown from the adrenaline rollercoaster and the inevitable exhaustion that then kicked in. On Monday morning the event field was all but empty except for some overflowing rubbish bins, some jumps to stack away and the task of relocating our office from the site back to the estate office again.

Event management is certainly hard work, challenging, demanding and requires precise levels of organisation. For me this was an exceptional opportunity to be part of the professional, enthusiastic team at Blair Castle working within the Atholl estate office environment - and it allowed me to understand the demands that running events can place on other enterprises within the estate. It’s a challenging form of diversification, with demands on the business as a whole and a mutual understanding needed from everyone on the estate to ensure its successful delivery.

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The DPEA Annual Review 2010–2011 Nikola Miller t: 0131 555 1200 | e: nikola.miller@smithsgore.co.uk

Nikola Miller has won the prestigious Royal Town Planning Institute’s Young Planner of the Year award.

The Scottish Government’s Directorate for Planning and Environmental Appeals (DPEA) published its annual review of 2010 - 11 late last year. This review reflects the first full year following the implementation of the planning reforms of 2009, and provides evidence of their impact.

A key aim of planning reform was to remove unnecessary delay in the planning system and to speed up decisions on planning applications and appeals as part of the Scottish Government’s emphasis on the importance of the stimulation of sustainable economic growth, and encouragement of investment in Scotland through the reformed planning system.

The headline figures are impressive, suggesting that these key aims of planning reform are being met through the new appeal process, for example with the determination of more than 80 per cent of appeals conducted in writing in 12 weeks.

Without being overly critical of the successes of the DPEA, it is also necessary to consider the current economic climate in the review of these figures. We are presently in a period where fewer appeals are being submitted. The number of planning permission appeals received fell from 777 in 2009 -10 to 282 in 2010 -11 suggesting that only the most robust and certain appeals are being submitted in this climate (although the introduction of Local Review Bodies will also certainly have had an impact on these figures as well). This is also reflected in the high success rate of 45 per cent for all appeals for this year.

Another reflection of the state of the economy and the property sector at the moment are the types being appealed.

While major retailing remains much the same as the previous year, numbers of appeals for residential and hotel applications are significantly less than last year.

However, despite difficult times, the DPEA has a success story to tell for 2010 -11, with reduction in the average time taken to conclude appeals conducted by hearing or inquiry; and the examination of development plans with the reporting on the majority of development plan examinations delivered in less than six months; and significant improvements in the time taken to process environmental appeals.

It will be in the next few years that we can really make a comparison for the DPEA and assess its impact on and reaction to planning reform.

New edict from Chief Planner for Scotland may mark major

breakthrough

for rural housing Debbie Mackay t: 0131 555 1200 | e: debbie.mackay@smithsgore.co.uk Onerous restrictions and legal burdens on rural housing may be a thing of the past with a recent edict from the Chief Planner for Scotland, Jim Mackinnon. In a letter to all Heads of Planning across Scotland dated 4 November 2011, the Chief Planner challenges them that “occupancy restrictions are rarely appropriate and so should generally be avoided.”

Those living, working and running businesses in the countryside will welcome this news. Despite a highly progressive national planning policy on rural housing, planning authorities are still imposing weighty and burdensome occupancy restrictions on housing in the countryside. In the current fragile marketplace those working in remote areas face unnecessary and unbalanced extra levels of restriction when seeking to

provide new housing necessary to support Regulations on Section 75 agreements their businesses, for key workers, farming that came into force on 14 November, families and retired farmers. allow those with existing occupancy restrictions to appeal against them.

At present, once an occupancy restriction is tied to a house, it can limit opportunities It’s a very welcome and positive move for sale, devalue the house by 25 to towards stimulating the rural economy, 30 per cent and restrict opportunities although it remains to be seen how local for mortgages. Occupancy restrictions planning authorities will translate this letter introduce an unnecessary inflexibility in into planning policy and practice. While the housing market in rural areas that in the letter may be a material consideration turn can limit access to affordable housing in the planning process, many existing for local people. They can therefore and relatively up to date Local Plan actively stagnate the local housing market policies will be directly contrary to it. This and economy because of the knock-on could lead to a measure of uncertainty for effects for rural businesses. applicants and appellants. However, it is a major step in the right direction and it This latest development should assist is to be hoped that the substance of the anyone applying for new housing in the letter will in due course be formalised into countryside in the future. But it should national policy. also, when combined with the new

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Renewables never out of the News

Thomas McMillan t: 0131 561 7100 | e: thomas.mcmillan@smithsgore.co.uk It’s been a busy few months on the renewables front since our last Newsletter. in the newspapers and magazines most days it’s hard to keep up so here is a

2011 12 December You won’t have missed it - the Feed-In Tariff (FIT) was cut for solar PV with only six weeks notice from the Government.

Subsequent outcry across the sector led to this move being overturned in the High Court. Any outcome of an appeal to the Supreme Court by Government is not clear at the time of publication. However, the story has moved on again with new rates for FiTs for solar PV set to be cut by over 50% for once and for all from the 3 March 2012.

28 November The Renewable Heat Incentive (RHI) application system was finally opened for non-domestic installations. This means that applications can now be made for biomass, heat pump, thermal solar and bio-methane systems. The RHI allows renewable heat to compete with fossil fuel systems and in some instances it makes fossil fuel systems obsolete with payback periods of less than 5 years achievable on some new renewable heating systems. The RHI is a £800m fund which will be allocated on a first come first served basis, so don’t hold back for too long.

11 November George Osborne announced an extra £100 million for Scottish renewable projects. Additional money is expected to be a boost to wave and tidal technology development and deployment.

9 November The Renewable Obligation certification system which supports large scale renewable schemes looks set to be maintained until at least 2017. Government proposes to cut rates on most technologies by about 10 per cent from 2013 to 2017, this was an expected move and will slowly bring renewable energy support down over time as technology advancements are made and cost efficiencies achieved.

As such we are unlikely to see a slow down in wind farm development in Scotland. As part of the review it is proposed that some waste and biomass technologies will be cut greater than 10 per cent while support will be more than doubled for wave and tidal power. Consultation on the Government’s proposals closed on 19 January 2012.

If you would like to know more about how the recent announcements could benefit your household or business, contact Thomas McMillan: t: 0131 561 7100 e: thomas.mcmillan@smithsgore.co.uk

9 February

With dozens of renewables articles summary of the main items of interest.

2012+ 2012

Feed-In-Tariffs to be amended The long awaited Feedin Tariffs consultation for all technologies was published with the proposed rates going forward laid out.

In some areas such as anaerobic digestion (AD) and hydro, continued investment will be encouraged with rates holding steady, while the future might look less attractive for other technologies like small scale wind, and solar PV where substantial drops in tariffs are already proposed or known.

One piece of good news in that the proposed revision in rates for wind should be implemented in October 2012 rather than the 1st April 2012.

This should result in a lot of activity over the next 6 months as those investing in both small scale and larger schemes are likely to aim to have them commissioned and in production by then to take advantage of the higher FiT rates.

October 2012 The Green Deal to be launched There has been much fanfare from Government about the ‘Green Deal’ but few people really understand what it’s going to look like. In November the Government provided some clarity confirming that £200m of incentives would be made available through the Green Deal with the ambition of kickstarting the upgrading of 14 million homes to make them more energy efficient.

RHI System to accept domestic applications Domestic renewable heat systems should be able to apply for RHI payments from October 2012, although from past experience delays to the launch of the application process may occur. Currently, policy documents indicate that retrospective payments will be made for any systems that were awarded Renewable Heat Premium Payment (RHPP) grants.

Early 2013 Green Investment Bank (GIB) It is estimated that £200 billion of funding is needed for the UK energy sector alone over the next decade. The Green Investment Bank will be capitalised with £3 billion, with the objective of playing a vital role in addressing market failures affecting green infrastructure projects. It is hoped that the Green Investment Bank will stimulate a step up in private investment in renewables. The Government expects to obtain state aid approval for the GIB by early 2013. In advance of that, the Government proposes to start making investments in green projects from April 2012.

Some critics have claimed that the actions of the new bank are overly restricted which will limit the impact that the bank can make. However Smiths Gore believes that it is a positive step forward and that some of the constraints will be ironed out over time.

If you would like to know more about how the recent announcements could benefit your household or business, contact: Thomas McMillan tel: 0131 561 7100 e: thomas.mcmillan@smithsgore.co.uk

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Paul Schofield t: 01738 552524 | e: paul.schofield@smithsgore.co.uk

Forest Pests and Diseases b e awa r e , b e a l e r t in recent years there has been an almost bewildering increase in new pests and diseases affecting both forest and amenity trees all over the UK and research indicates that climate change is likely to create the conditions for even greater pest activity in the future.

Main threats include acute oak decline, bleeding canker of horse chestnuts, great spruce bark beetle, horse chestnut leaf miner, oak pinhole borer, oak processionary moth, Phytophthora ramorum, P kernoviae, P lateralis, pine lappet moth, and red band needle blight.

Potential threats not yet present, but of which we should be aware, include ash dieback, citrus longhorn beetle, eighttoothed European spruce bark beetle, emerald ash borer and pinewood nematode.

This long list underlines the need for tree managers and owners to be increasingly aware of the risk of pests and diseases on the properties that they manage.

Pine lappet moth The pine-tree lappet moth Dendrolimus pini is present throughout Europe and Western Asia but is not native to the British Isles. It is a serious defoliator of pine and other coniferous species and known to cause significant damage over large areas within its natural range, lasting up to eight years before declining.

The first adult moths were identified in Inverness-shire in 2004 and larvae were found at various sites in the region in 2009, the first evidence of an established breeding population in the area.

Outbreaks of pine-lappet moth result in seriously reduced tree growth, tree decline and tree death, particularly since defoliation can increase susceptibility to other pests such as bark beetles and wood boring insects. The moth has been identified as a significant environmental and economic threat to pine forests in northeast Scotland and further afield if allowed to spread.

Phytophthera ramorum Phytophthera are a large group of fungus-like pathogens that cause diseases in plants and trees. The name is derived from the Greek meaning literally ‘plant-destroyer’. There are four principle diseases in this group affecting a wide range of UK species including larch, alder, Lawson cypress, beech and common oak.

Phytophthera ramorum, or Ramorum disease, is of great concern in Scotland at the moment. Since 2009, it has caused extensive damage particularly to Japanese larch in many parts of England, Wales and Ireland. Three outbreaks have occurred on Japanese larch in Scotland, the first two in 2011 on the Craignish Peninsula and Isle of Mull, and the third last October near Newton Stewart.

On larch trees, the disease causes crown and branch dieback with retained dead needles and resinous lesions. Needles wilt and turn grey or blackish before dying and tree death can follow in a matter of months. The only way to contain the

13

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The Forest Service of Northern Ireland recently reported the first finding of a Sitka spruce infected with Phytophthora ramorum. The disease also affects rhododendron, viburnum and camellia.

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disease is to fell the infected area as well as surrounding trees and host plants.

Red band needle blight Red band needle blight (RBNB) is caused in this country by the fungal pathogen Dothistroma septosporum.

The Confederation of Forest Industries has described RBNB as the most significant disease of coniferous trees in the UK. First recorded in Scotland in 2002, it has since caused extensive damage, including death, to Corsican and Lodgepole pine stands. Although there has been an increasing rate of infection of Scots pine, this species appears to be generally more resilient to the disease.

Although primarily a disease of pines, European larch, Douglas fir and some spruce species can also host the disease. The distribution of infected stands is widespread throughout the Forestry Commission estate in Scotland. However, detailed information about the extent and severity of the disease in private woodlands is limited.

RBNB is currently listed in the EU Plant Health Directive as a ‘quarantine pest’ with controls restricting the distribution of pine plants for planting, the only recognised pathway of spreading the disease. Controls require that before pine plants can be released for planting, the nursery and its immediate vicinity (defined as the known natural dispersal distance for RBNB of 550m) must have been found to be free of symptoms of the disease since the beginning of the last growing season.

Acute Oak Decline Of the potential threats present in the UK, but not yet in Scotland, Acute Oak Decline is one of the most significant.

The condition is caused by bacteria and affects both native oaks. It is currently most prevalent in the Midlands but cases have also been recorded in Wales. Symptoms include numerous bleeding patches on the infected tree stem and the canopy may become thin as the tree approaches death. Some trees die within four or five years of the onset of symptoms. Felling is generally the most appropriate remedial action.

Bark and sapwood must be destroyed before material can leave an infected site.

Great Spruce Bark Beetle On a more positive note, the control of the great spruce bark beetle Dendroctonus micans has been a notable success.

Although the pest is still present, it has not been recorded in large parts of Scotland for some time and the threat it poses has been greatly reduced since it was first discovered in the UK in 1982. This has been achieved largely through licensed release into infested areas of the beetle Rhizophagus grandis, a natural predator of D. micans which has proved to be more efficient than earlier control methods which focused on sanitation felling and control on the movement of timber.

Detailed information about the pests and diseases described above can be found in the Plant Health section of the Forestry Commission website www.forestry.gov.uk/ forestry/infd-6abl5v

Climate Change According to Forest Research, predictions of future changes in climate indicate that drought is likely to become a more important factor affecting tree health, particularly in eastern areas including parts of Scotland. As well as direct physiological damage, drought is known to increase susceptibility to various fungal diseases.

Sitka spruce is intolerant of drought and the species can sometimes experience tree mortality and stem cracking as a result of drought damage in eastern Scotland. Together with direct drought damage, cases of conifer butt root Heterobasidion annosum and honey fungus Armillaria spp., both common tree pathogens, are predicted to increase on Sitka spruce and other species in eastern Scotland as a result of climate change.

Scots pine and larch are predicted to experience increased infection by bark beetles and bluestain fungi on droughtprone sites.

Mature broadleaved species such as oak, ash and beech are also likely to show a decline in health in some areas associated with drought stress and root diseases.

Although a number of diseases are known to be more aggressive on trees experiencing drought stress, there is uncertainty about which ones are likely to increase in frequency and severity in response to climate change.

Nevertheless, a general increase in the incidence of tree diseases in drought prone areas appears likely if current predictions are correct.

This means it will become even more important, as far as possible, to match tree species to local site conditions, helping to ensure that drought-susceptible species such as Sitka spruce, Norway spruce, larch and beech are planted on sites with suitable soil moisture regimes both in the current climate, and the projected future climate. Alternative species with greater drought tolerance include Scots pine, Douglas fir or ash.

For decades, forestry practice tended to rely on site modification to create suitable conditions for particular species rather than matching the species to specific soil conditions. Perhaps now is the time to start getting the spade out again.

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News in brief Land Girls Memorial

Smiths Gore’s Fochabers Office is sponsoring the memorial commemorating the women of the Land Army in Scotland, to be erected at Clochan, Fochabers on land provided by the Crown Estate.

The ranks of the Land Army were made up of more then 80,000 women, many of whom left Britain’s towns and cities during World War II, to take over the farm work of the men who had gone to war. It was hard graft, mainly manual work in all conditions, keeping the nation farming to produce food to aid the war effort at home and overseas.

Mark Fogden, Fochabers

To date there has been little, recognition of the Land Army’s efforts and the charity, Land Army Memorial Scotland, has raised £40,000 over the last two years to fund the project.

Smiths Gore is providing architectural services and planning services free of charge for the planning application.

Cross compliance and water quality

Farming clients should be aware that new rules regarding the application of fertiliser near watercourses came into effect from 1 January supplementing those already governing Scotland’s nitrate vulnerable zones (NVZs).

Wildlife and Natural Environment (Scotland) Act 2011

Most landowners will be aware of the introduction of the Wildlife and Natural Environment Act. However, not all may know that within the Act, the criminal act of Vicarious Liability came into force on 1 January 2012. Vicarious Liability enables owners and managers involved in the sporting industry to be held liable for certain wildlife crimes, even if committed by others.

Various stakeholder groups have had input into the Act including Scottish Land and Estates who have recently published the ‘Due diligence good practice guide’ as the defence to a prosecution under Vicarious Liability may be ‘due diligence’.

Smiths Gore has been liaising with its management clients where in-hand sporting is operated to assess the due diligence process and put in place the basis of a system for ongoing due diligence and training reviews - something we would encourage all landowners, sporting tenants, syndicates and agents to do.

If you would like to hear more about the process Smiths Gore has undertaken for a number of clients contact : Gordon Kerr at our Perth office t: 01738 552524 or email gordon.kerr@smithsgore.co.uk

Douglas Ogilvie, Perth

The new rules cover the application of chemical or organic fertilisers near watercourses, wells and bore holes where a breach could result in penalties being applied to Single Farm Payments.

The new measures are designed to help protect watercourses by tackling diffuse pollution and run-off and to improve water quality.

Paddy Paton

Well known Edinburgh property agent Patrick Paton has joined Smiths Gore to strengthen its estate agency team in Scotland. Paddy, who has been with Knight Frank for five years, joins his former mentor John Coleman, who also left Knight Frank last year to head up the residential and farms agency side of Smiths Gore in Scotland. Paddy, who started on 23 January, will be helping to develop the agency business across Scotland.

Alasdair Sibbald

Alasdair is based in the firm’s Haddington office, and passed the APC (Assessment of Professional Competence) examination at the first sitting last Autumn becoming a Member of the RICS.

Alasdair, a graduate with a degree in Property from the University of Aberdeen, subsequently studied for a postgraduate degree in Urban Regeneration at Heriot-Watt University.

He currently looks after various private estates in Midlothian, South Lanarkshire and Renfrewshire, and manages let residential property throughout Southern Scotland for clients.

Continued >

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THE PULSE Richard Girdwood

Richard Girdwood has been appointed by Smiths Gore as head of residential agency for Northumberland and Berwickshire based in the firm’s Berwick on Tweed office. He arrives with experience of having handled sales of some the most prominent properties in the area, and aims to continue this by further increasing Smiths Gore’s presence within the region and developing their reputation as agent of choice for the finest and most unique country houses, farms and cottages.

Are we losing the plot?

Is too much land that could be used for food production going for other uses, like forestry or renewables?

Dr Adam Smith Director Scotland, Game & Wildlife Conservation Trust Climate change and shortages of food, energy and water could be a global ‘perfect storm’. ‘Future Scotland’ thus needs balanced not exclusive land use, delivered through ethics such as the sustainable intensification of agriculture and game management. And this vision is achievable now, as the Game & Wildlife Conservation Trust’s Allerton Project demonstrates.

Iain Anderson

Iain has joined the Fochabers office as Forester. He graduated with an MSc in Sustainable Forest Management from the Scottish School of Forestry in Inverness, a part of the UHI Millennium Institute, in 2010.

Iain’s main responsibilities include managing client forest enterprises for a range of priorities including commercial timber, sporting and game, and amenity woodland, with a current portfolio covering in the region of 5000 Ha of trees.

William Hawes

Based in the firm’s Fochabers office, William passed the APC (Assessment of Professional Competence) examination last Autumn in the minimum period of 24 months and becomes a Member of the RICS. A Business and Finance graduate of the University of Cardiff, William subsequently studied for a postgraduate degree in Rural Estate Management at the Royal Agricultural College, Cirencester.

He currently looks after two lowland estates in Morayshire for institutional and private clients. In addition he manages two further estates, one in Aberdeenshire and another in Strathspey.

Dr Andrew Midgley Scottish Land & Estates No. Land can be put to multiple uses and deliver a range of benefits to society with space for food production, forestry and renewables to co-exist.

Forestry, for example, tends only to be economic on the least productive land and so increasing the area of forestry will have a relatively small impact on food production. There is a need to be rational and strategic about the best use of different types of land while looking to maximise the opportunities for multiple benefits from the same areas.

Dr Justin Irvine The James Hutton Institute Alternative land-uses such as forestry and renewables can provide important livelihoods and public benefits. However, managers and policy makers need to be equal partners in decisions over land-use priorities in order to safeguard the natural resources we depend on in the face of a changing world.

Mark Fogden Partner, Smiths Gore, Fochabers It is not a question of losing the plot, but accepting the reality of industrialisation and reliance on fossil fuels. We need to balance food and environmental security protecting productive land for food production. There is no reason why food and environmental security cannot co-exist in the majority of circumstances.

Scotland Offices Berwick-upon-Tweed office 8 Castlegate Berwick-upon-Tweed Northumberland TD15 1JS tel: 01289 333030 fax: 01289 333031 email: berwick@smithsgore.co.uk

Dumfries office

28 Castle Street Dumfries DG1 1DG tel: 01387 263066 fax: 01387 257103 email: dumfries@smithsgore.co.uk

Edinburgh office

12 Bernard Street Edinburgh EH6 6PY tel: 0131 555 1200 fax: 0131 554 2211 email: edinburgh@smithsgore.co.uk

Fochabers office

7 The Square Fochabers Moray IV32 7DG tel: 01343 823000 fax: 01343 823030 email: fochabers@smithsgore.co.uk

Haddington office

Haddington House 28 Sidegate Haddington EH41 4BU tel: 01620 828960 fax: 01620 828961 email: haddington@smithsgore.co.uk

Perth office

The Estate Office Scone Palace Perth PH2 6BD tel: 01738 552524 fax: 01738 552588 email: perth@smithsgore.co.uk