The Savills Portfolio

Landscope

17 November 2020

The Agriculture Bill has now been enacted into UK law after facing over 100 hours of parliamentary scrutiny since it was re-introduced to Parliament in January. It promises to entirely change the face of farming subsidies, with BPS payments phased out in favour of ‘public money for public goods’. 

Proposed measures to allow the UK to reach its targets for ammonia emissions also promise a similar step change in agricultural practice. A proposed ban on solid urea fertilisers would reduce ammonia emissions but also have significant cost implications for many farming businesses. Further support has been announced as renewed restrictions are introduced in response to increasing Covid-19 infections. Both the Coronavirus Job Retention Scheme and protections for tenants have been extended into 2021 and funding available through the Self-Employment Income Support Scheme (SEISS) will be increased.

FOOD & FARMING

Government considers ban on urea
87% of the UK’s ammonia emissions originate with farming, 18% of which is attributed to inorganic fertiliser. With commitments to reduce ammonia emissions by 16% by 2030, farming looks set to bear the burden of these obligations. Measures are already in planned to tackle ammonia emissions from other practices including requiring the use of low emission agricultural spreading techniques by 2025 and slurry stores to be covered by 2027. 

A new government consultation on reducing ammonia emissions outlines three potential actions to meet the reduction targets:

• A total ban on solid urea fertilisers

• A requirement to stabilise solid urea fertilisers with a urease inhibitor

• Restrict the spreading of solid urea fertilisers to between 15 January to 31 March 

The wording of the consultation indicates that a blanket ban would be the preferred approach, achieving around 31% of the ammonia reduction target by 2030.

Urea fertilisers are strongly linked to a number of negative effects. By reacting with other pollutants, ammonia forms particulate matter which is able to penetrate the lungs and enter the bloodstream. Here it goes on to cause cardiovascular and respiratory health issues. Inaccurate or excessive application of nitrogen fertilisers results in mobile nitrogen which can go on to pollute water courses and sensitive habitats as well as cause harm to plants and animals. 

Farming groups have been quick to point out the difficulties this could create for farmers. Roger Sylvester-Bradley, head of crop performance at Adas, said “although urea only makes up about 20% of the fertiliser market, it is significantly cheaper than ammonium nitrate (AN)”. Removing urea as an option or requiring a urease inhibitor would have significant cost implications. Growers would still be permitted to use liquid urea, but Mr Sylvester-Bradley noted that this is usually incorporated with liquid AN and requires specialist equipment and storage.

Avian flu identified in two locations
The risk of avian influenza in wild birds has been raised to ‘high’. The risk of infection of poultry has also been raised from ‘low’ to ‘medium’. There have so far been  two confirmed cases of avian influenza in England and further cases reported in mainland Europe, with concern that wild birds migrating to the UK from mainland Europe during the winter period will spread the disease. All bird keepers are being urged to prevent direct or indirect contact with wild birds. Effective measures include:

• Maintaining high sanitary conditions

• Placing feed and water in fully enclosed areas

• Fencing around outdoor areas

• Avoid keeping ducks and geese with other poultry

Avian influenza of the H5N8 strain was confirmed at a premises near Frodsham in Cheshire. Testing confirmed that this is a highly pathogenic strain related to the virus currently circulating in Europe. All 13,500 birds at the farm will be humanely culled to limit the spread of the disease. A 3km Protection Zone and a 10km Surveillance Zone have been put in place around the infected site to limit the risk of the disease spreading. This case is unrelated to the H5N2 strain which was confirmed in at a separate premises near Deal in Kent where a 1km restricted zone has been put in place and all birds culled. Both outbreaks pose a very low risk to human health and food safety.

Welsh farmers too reliant on EU
Welsh farmers are too reliant on EU exports according to International Trade Secretary Liz Truss. She says that with 92% of lamb exports destined for Europe, “all the eggs are in one basket” and believes it shows the importance of opening up to markets around the world. According to Ms Truss, there were "real benefits" in a recent trade deal struck with Japan and new efforts are underway across the Middle East, USA, New Zealand and Australia. There was a growing demand for high quality protein across Asia which Wales was in a "very good position" to supply. She said “there is much to do and very little time” for a trade deal to be struck and added “we cannot afford to face eye watering tariffs, even for a short time”. Ms Truss’ statistics do not divulge the entire story however. Around 35-40% of Welsh lamb is exported, of which 92% does go to EU markets. The remainder is consumed within the UK. 

 

Covid-19

Furlough extended and support increased
Government has extended the Furlough scheme until the end of March meaning employees will receive at least 80% of their salary for hours not worked. The furlough scheme was initially extended until 2 December but the government says it is now “going further so that support can be put in place for long enough to help businesses recover and get back on their feet”. There are currently no employer contributions to wages for hours not worked; employers are only asked to cover National Insurance and employer pension contributions. For an average claim, this accounts for just 5% of total employment costs or £70 per employee per month. Support through the Self-Employment Income Support Scheme (SEISS) is also to be increased. The third grant covering November to January will be calculated at 80% of average trading profits, up to a maximum of £7,500. A further review will be held in January. 

 

POLICY

Agriculture Bill enacted into law
The Agriculture Bill has officially been enacted into UK law after facing over 100 hours of parliamentary scrutiny since it was introduced to Parliament in January. From next year, farmers will begin a seven-year transition period to adapt to a new agricultural system of ‘public money for public goods’. The Basic Payment Scheme will be phased out in favour of the new Environmental Land Management (ELM) scheme. There will also be funding to boost farm productivity and for animal health and welfare improvements.

Both houses have now agreed on the text after a prolonged battle over wording around food standards. The final hurdle saw the Lords vote not to reinstate an amendment specifying that imports match UK standards following concessions from the lower house. MPs agreed to allow greater parliamentary scrutiny and beef up the powers of Trade and Agriculture Commission. The government will also report on UK food security to Parliament every three years. The first report will be published at the end of next year, and will include analysis of the impact of the coronavirus pandemic on food supply. It will also consider other factors of food security such as consumer confidence, food safety and availability. 

We examine what the Agriculture Act means for UK agriculture in our latest blog.

Agri-food in the UK-Japan deal
Total UK agri-food exports to Japan were worth around £402 million in 2019-2020, of which £271 million was beverages, spirits and vinegar and £131 million was other agri-food products. The vast majority of the £131 million of other agri-food exports is not subject to quotas and will be covered by tariff reductions or eliminations under the new trade deal agreed between Japan and the UK. Those reductions include beef (38.5% reducing gradually to 9% by 2033), higher value pork (4.3% reducing gradually to 0% by 2027) and cheddar cheese (29.8% reducing gradually to 0% by 2033).

Of the 25 Tariff Rate Quotas (TRQ) covered by the previous EU-Japan agreement, negotiations focused on those that would offer the highest usage and most value to the UK according to the Department for International Trade. The new arrangements will cover 99% of the value of UK exports that were made in 2019-2020. The UK will continue to have access to the same preferential tariff rate for 10 priority TRQs and UK exporters will continue to benefit from Japan’s duty-free global TRQ for malt.

The arrangements are seen as a bridge to the UK’s eventual membership of the Trans-Pacific Partnership which the UK expects to join in 2024. Japan has committed via a Ministerial side letter to support the UK’s quick accession to CPTPP. Japan has further committed to working closely with the UK to ensure the agreement  operates effectively in the meanwhile and to give unfettered access to any under-utilised EU quota. The UK expects there will continue to be enough surplus volume in the EU TRQs until 2024.

Combatting biodiversity loss
Plans to commission a Scottish Centre of Expertise in Biodiversity have been announced as part of the new draft strategy for the environment, natural resources and agricultural research programme. The Centre will be established during the course of the next research programme which begins in 2022. As well as a new focus on biodiversity, the draft strategy sets out plans for funding research on topics not previously included in the research programme. These include air quality and the circular economy. A public consultation on the strategy is now open, seeking views on future research priorities and delivery mechanisms.

The research programme currently receives £48 million of Scottish Government investment annually. It supports nearly 1,500 jobs directly and indirectly across Scotland. It also enabled research institutes to leverage in £28 million in additional funding from other UK and international funders in 2018-19.

 

ENVIRONMENT & NATURAL CAPITAL

Healthy Bees
Defra has launched the Healthy Bees Plan 2030 to help protect honey bees. Honey bees contribute directly to local food production through pollination, which is estimated to have an annual economic benefit of £600 million. The plan sets out four key outcomes to help protect honey bees:

• Effective biosecurity and good standards of husbandry

• Enhanced skills and production capacity of beekeepers and bee farmers

• Sound evidence underpinning the actions taken to support bee health

• Increased opportunities for knowledge exchange on pollinator needs

The Healthy Bees Plan 2030 was developed in consultation with bee health stakeholders and is aimed at sustaining the health of honey bees and beekeeping in England and Wales over the next decade. Action to implement the plan will now be taken forward together in collaboration with beekeepers, bee farmers, associations and government.

Community buyout funding secured
A community bid to buy more than 5,000 acres of land in southern Scotland has secured funding just two days before the deadline. The Langholm Initiative wants to purchase part of Langholm Moor and create a nature reserve. While it has not reached its top funding target of £6 million, it has raised more than £3.8 million which will allow the group to buy the land from current owners Buccleuch. The Scottish Land Fund, South of Scotland Enterprise and The John Muir Trust, as well as a surge in public donations, have helped the group to reach its target. The Woodland’s Trust also contributed £200,000. In the run-up to the deadline, Buccleuch Estates also agreed a revised £3.8 million price for the purchase.

Once the purchase is complete in January 2021, the initiative has a number of plans for the area to help regeneration, tackle climate change and develop outdoor tourism. Plans centre around the creation of the Tarras Valley Nature Reserve. Executive chairman of Buccleuch, Benny Higgins, said: "We're absolutely delighted to have reached a significant agreement with The Langholm Initiative, and this deal demonstrates what can be achieved when everyone involved is committed to working together." His comments were echoed by Environment Secretary Roseanna Cunningham who said “when working together with a shared goal, local communities can be a powerful vehicle for change."

Independent review of flood insurance 
Around 6% of households at risk of flooding do not have flood cover included within their home insurance policy. A newly published independent review recommends that insurers and intermediaries do more to help people get the right insurance. Landlords in high flood risk areas should also provide renters with details of the building’s insurance cover at the start of their tenancy, including the support that would be provided by the insurer to the tenant in the event of a flood. Combined with better guidance to tenants from local authorities, this would help people to make fully informed decisions when purchasing contents insurance. The review has also recommended the government explore how it could use its existing powers to compel both private and social housing landlords to comply with this requirement. The report is based on data collected through speaking to residents in the Doncaster area in Yorkshire where over 760 properties were flooded.

NRW’s Climate Emergency response
Electric all-terrain vehicles and solar battery tools are being trialled by Natural Resources Wales (NRW) as part of plans for the Welsh public sector to become carbon neutral by 2030. If the trials are successful, the eco-friendly vehicles could replace NRW’s all-terrain vehicles and quad bikes, leading to a 65% reduction in their CO2 emissions. Tools such as strimmers and chainsaws, charged by solar power, reduce their emissions by around 99%. 

 

PROPERTY & DEVELOPMENT

New protections for renters
Renters will be protected during new national coronavirus restrictions, with no bailiff enforcement action until 11 January 2021 at the earliest. Six month notice periods will also remain in place until at least the end of March 2021. These measures will remain true in all except the most serious of cases such as illegal occupation, fraud, anti-social behaviour, eviction of domestic abuse perpetrators in social housing; and where a property is unoccupied following the death of a tenant. There is also the intention to  introduce an exemption for extreme pre-Covid rent arrears.

 

OTHER RURAL NEWS

And finally…
Farmyard election
A six-month-old French bulldog named Wilbur Beast has won a landslide victory in Rabbit Hash, Boone County, Kentucky. Wilbur prevailed despite fierce competition from a beagle called Jack Rabbit, a golden retriever, a donkey, a cat and a rooster. Wilbur received 13,143 votes and beat the incumbent Mayor, a pit bull named Brynneth Pawltro, elected in 2016. For those wondering, these elections are not official and there has been an animal mayoral election in the town since 1998. A vote costs $1 which goes towards the Rabbit Hash Historical Society who managed to raise more than $23,000 this year. The tradition began when Boone County celebrated its 200th anniversary in 1998. Mayors within the county were asked to honour that birthday but being as Rabbit Hash is so small, it didn't have a mayor so they elected an animal instead.