Rural Newsletter - February 2011

    Welcome to the first e-newsletter of 2011, a year in which the rural sector will be dominated by high commodity prices.

    The Secretary of State, Caroline Spelman, set the tone at the Oxford Farming Conference when she called for a fundamental change to CAP, currently under negotiation to take place in 2014. Following increased profitability, the Government would like to see a move of payments away from large commercial units to the Rural Economy in Less Favoured Areas, whilst maintaining positive environmental gains elsewhere. 

    Farm businesses will have to seek further efficiencies and resist the temptation for capital expenditure on machinery or excessive management. Perhaps the temptation should be taken to restructure more widely and take advantage of the recent Balfour case for Inheritance Tax purposes in balancing investment and trading income to gain Business Property Relief. 

    Meanwhile, against increasing commodity prices the land market continues to move forward with strong demand from farmers and investors. Our research department predicts growth of 6% in 2011. It is likely too that rents will respond to commodity prices although the livestock areas will face greater difficulties. 

    Opportunities also stretch across into the Energy market driven by the Feed-in Tariffs and Renewable Heat Incentives, creating opportunities for diversification, perhaps taking advantage of bankers’ willingness to lend against land based securities. 

    This newsletter addresses some of these topics – the outlook for rents, the year’s agenda set out in the Oxford Farming Conference and the state of the global farmland market.  In addition, the article on mediation highlights a relatively new approach to dispute resolution. As ever, if you would like to discuss these or any other issues in greater detail, our teams will be happy to help.


    Key contacts

    David Cross

    David Cross

    Farm Agency

    Savills Salisbury

    +44 (0) 1722 426 813

    +44 (0) 1722 426 813