The Savills Portfolio

Landscope

22 April 2020

Responding to images of farmers being forced to pour milk away, the Government has relaxed competition rules so that the industry can collaborate to manage supplies and make sure processing capacity is maximised. 

This is likely to be welcomed by the dairy industry but it does not offer the financial support it was seeking. A shortage of labour for seasonal harvest work still seems likely despite recruitment campaigns receiving a high level of interest. More action to resolve this is needed before produce is left unpicked in the field. In Scotland a review of the Tenant Farming Commissioner’s role has concluded that it should gain the authority to sanction those who breach codes of practice, and its remit should be extended beyond tenancies to include joint ventures and business partnerships.

FOOD & FARMING

Farm workers flown in to help address labour shortage
Farm workers from Eastern Europe are being flown into the UK on charter flights to help pick fruit and vegetable crops. The first flight arrived on 16 April carrying 180 skilled Romanian workers for G’s Growers. The skilled workers were already under contract and will be used to help train UK recruits. The charter company expects to operate up to six flights between mid-April and the end of June to make up for shortages in seasonal labour. These workers will be fully screened on arrival and anyone with a temperature will be quarantined.

Several recruitment websites show that recruitment drives are generating interest in agricultural roles. Totaljobs has seen searches for terms such as "fruit picker" or "farm worker" surge by 338% and 107% respectively. The charity Concordia has warned that despite the response, a shortage of labour is still likely. While 36,000 people had registered interest with the charity, only 112 have agreed contracts. Of those registering an interest less than a third have an agricultural background and nearly half are seeking work due to coronavirus affecting their previous role. Jack Ward chief executive of the British Growers Association has questioned how sustainable a reliance on furloughed workers can be for producers, thinking ahead to June when 35,000 workers are needed; if the lockdown is relaxed “will we see a mass exodus of people going back to their original jobs?”.

The training and qualification body Lantra has launched skills matching services in Scotland and Wales to help match rural businesses with potential employees and volunteers. The Scottish service is focused on livestock and animal welfare roles, whilst the Welsh service has a wider remit. Links to campaigns, recruiters and agencies can be found on the Pick for Britain website.

Spotlight on Red Meat Outlook
Red meat markets face unprecedented levels of scrutiny and disruption. Changing consumer attitudes, continuous innovation and increased environmental awareness all have the potential to significantly change the future of red meat production. The latest Savills Spotlight explores the factors shaping the red meat sector and its future direction. The report answers a number of key questions:

• What are the key markets that producers should target?

• How can supply chain disruption be minimised?

• Can livestock contribute to achieving net zero?

• Is the rise of veganism in the UK overplayed?

 

Covid-19

You cannot furlough a dairy cow
Dairy farmers in the UK have been forced to dump thousands of litres of milk as demand plummets. The market is normally equally split between the retail and food service sectors. While demand has increased by 15-20% from the retail sector, food service demand has fallen by 70% as cafes and restaurants are mostly closed. Producers contracted to processors who supply the food service sector are the most heavily affected, but staff shortages and production issues due to workplace restrictions have also delayed farm collections. Processor Freshways is heavily affected and has recently written to its suppliers to inform them with effect from 29 March it will only pay the contract price for 60% of their contracted milk, the rest will be paid at the spot rate which it fetches on the open commodity market.

NFU President Minette Batters said the dairy industry “faces unprecedented disruption in the short term because it cannot furlough its dairy cows”. The NFU and dairy industry are united in a call for the Government to take action and have held robust exchanges with government officials. They have called for:

• A targeted grant scheme for affected farmers that is similar to the Retail, Leisure and Hospitality Grant Fund

• Defra to convene a ‘Supply and Demand Management’ roundtable under competition law exemptions to maximise the flow of available milk through the supply chain

• The introduction of a national production reduction scheme

• Engagement with the EU Commission to access market support measures.

Ms Batters said these interventions would “ensure that we continue to supply the country in the short term while maintaining the productive capacity of this most iconic of sectors post-lockdown.”

Defra has since announced a relaxation of competition rules so that dairy farmers and producers can collaborate to avoid their surplus milk going to waste and harming the environment. Dairy UK and the Agriculture and Horticulture Development Board will lead work to identify spare processing capacity, stimulate demand and temporarily reduce production whilst identifying opportunities for processing milk into storable milk products such as butter, cheese and skimmed milk powder. It is noteworthy from a policy perspective that the UK government is refusing to consider the type of market-based interventions that the European Union has previously offered to the dairy sector in times of crisis, preferring to rely on supply chains and industry bodies to manage the problems.

Financial support for businesses improved
The Government is supporting businesses and individuals through a range of measures which are designed to mitigate against the financial impact of coronavirus and retain employment so that the country can make a rapid economic recovery. It has recently amended the eligibility date for the Coronavirus Job Retention Scheme from 28 February to 19 March. This means any employees who were on the PAYE payroll of a business and notified to HMRC on an RTI submission on or before 19 March are now eligible to be furloughed. Any employees who were employed as of 28 February but subsequently left or were made redundant, can be re-employed and put on furlough if the employer wishes. The Government has also extended the scheme until the end of June. Our updated Coronavirus Economic Reliefs guidance note provides a summary of all of the support available.

No return to normal
More wildlife, cleaner air and stronger communities mean only 9% of Britons want life to go back to how it was before the lockdown. A YouGov poll of 4,343 adults showed around a half have noticed cleaner air and just over a quarter thought there was more wildlife. Around two-fifths felt they were catching up with friends and family more as well as feeling a stronger sense of community with their wider area. Attitudes have changed to food in particular with 42% valuing food and other essentials more, and 29% storing more at home. A third of those surveyed also say they are throwing away less food and 38% are cooking more from scratch. With the closure of cafes and restaurants, it will come as no surprise that an extra 503 million (+38%) in-home meals are being eaten each week according to Kantar Worldpanel.

Rights of Way guidance
Natural England has issued guidance on access to green spaces and Public Rights of Way. While noting that the best way to prevent the spread of COVID-19 is to stay home, it acknowledges the importance of exercise and the added benefits of nature in pursuing that exercise. The risk of COVID-19 being passed on while encountering others on these routes is considered to be very low if social distancing measures are followed. Landowners cannot obstruct rights of way but in very limited circumstances where usage is heavy, may consider the following measures:

• Tying gates open to minimise contact with the gate

• Polite notices encouraging social distancing

• Offering alternative routes around gardens and farmyards, whilst maintaining access to the original route.

EFRA investigate recent food supply experiences
The Environment, Food and Rural Affairs Committee wants to know if the COVID-19 outbreak has affected the public’s ability to get the food they need. Responses will be used to analyse whether Defra’s action was sufficient and which areas require more support. The 10 minute survey will remain open until 28 April.

Environmental Land Management discussion paused
Due to COVID-19 Defra has paused its request for feedback on its proposals for Environmental Land Management (ELM). It says the online policy discussion will be reopened “once it is practical to do so” and the planned regional events will be rescheduled. It is not known whether this will affect the launch date for ELM.

Rescue package for US farmers
US farmers will receive a £12.3 billion government bailout amid a slowdown in demand for agricultural commodities. The Food and Agriculture Policy Research Institute has predicted a £15.9 billion loss in farm incomes. Livestock producers have seen a significant fall in prices as meat processors close down to restrict the spread of coronavirus. Reduced demand for fuel and therefore ethanol has also affected both domestic and export markets for crops. This slowdown is forecast to reduce maize consumption by 9.5 million tonnes and will only be partly offset by increased use in other sectors. The phase one trade agreement between the US and China, where China committed to import substantial additional quantities of US commodity crops, is also at risk. Maize prices are predicted to reach £131 per tonne, down from £148 per tonne a month ago. While this will help to suppress the overall cost of livestock feed in the UK, a more immediate effect has been an increase in the price of distillers’ grains as supply has reduced.

 

POLICY

Scotland learns from overseas community land ownership
A report into international experience of community ownership of land for the Scottish Land Commission has concluded there is no such thing as a ‘normal’ community ownership model. Models used around the world do however share some characteristics:

• Strong local governance

• Transparent decision-making

• Clear democratic accountability

• Focus on local priorities

• High levels of public engagement

Its recommendations include investigating further the potential application of the Community Land Trust model to deliver affordable housing in Scotland and also that partnership or ‘hybrid’ models of landownership involving communities (of place and of interest), non-governmental organisations, private landowners and the state deserve further attention.

Transition period negotiations to go ahead
The EU and UK have agreed three new rounds of negotiations to take place via video conferencing between April and the beginning of June. These planned rounds are less than half of the eight or nine that were expected to take place before June and will come after almost two months with little contact. The Withdrawal Agreement allows for an extension of up to two years if both sides agree by July 2020, but the UK Government remains adamant that the transition period will not be extended, despite the ongoing public health crisis. It is believed discussions will be focused on fisheries, trade and level playing field arrangements.

 

ENVIRONMENT & NATURAL CAPITAL

Net zero: Government needs to change otherwise we will fail
In its latest recommendations to government, the Natural Capital Committee has warned that “the current siloed approach to delivering net zero, with several departments and other bodies involved but with no overall coordination, will fail to deliver the intended outcome”. The committee argues that a joined-up government response is needed to ensure that net zero is achieved and stresses that the importance of the Environment and Agriculture Bills in driving land use change should not be underestimated. Government should prioritise evaluating and undertaking spatial planning for the following five nature based interventions:

• Maintaining and increasing tree cover

• Maintaining and increasing soil carbon (including peatland restoration)

• Improving wildlife and biodiversity

• Managing freshwaters and wetlands

• Sea use changes

Schemes to increase tree cover are already underway, however beyond peatlands, soil carbon has not featured strongly in net zero plans as its measurement and accreditation is more challenging. The committee argues that maintaining existing stocks is equally or more important than creating new stocks of biocarbon. It describes current soil carbon monitoring programmes as inadequate and calls on the Government to urgently allocate funding to develop metrics given the important role of soil management in meeting net zero.

The next Woodland Carbon Guarantee auction is approaching
£10 million will be available in the second Woodland Carbon Guarantee auction. To take part land managers need to apply by 5 June; the auction will then run online between 8 and 19 June. Successful participants will be offered the option to sell Woodland Carbon Units to the Government at set points over the next 35 years. The auction will set a price for the units which is then protected against inflation. Landowners are free to sell their units privately if the price is more favourable and can also use other grants to help establish and maintain their woodland. The first auction in February saw 18 contracts offered by the Forestry Commission to help stimulate the creation of 182 hectares of new woodland. If you would like to discuss further please contact Peter Topham.

A good year for wildflowers?
Wildflowers could see their best summer for decades due to councils delaying or scaling back verge mowing. These miniature meadows are home to an estimated 700 species of wildflowers, 45% of the UK’s total flora, and also provide benefits to a wide variety of wildlife from birds to bees to bats. Ordinarily, mowing destroys millions of flowers and inhibits their regrowth by leaving behind a thick thatch of cuttings which encourages nitrogen-loving nettles to grow. The charity Plantlife has previously lobbied for mowing to be reduced; Kate Perry, the group’s road verge campaign manager, said “simply cutting verges less and later will save plants, money and reduce emissions”. As well as supporting biodiversity, the charity believes the roadside flowers will provide "solace in nature" in these unique times.

Principles of Gamebird Management in the UK
The Game and Wildlife Conservation Trust has proposed a series of principles for gamebird management in the UK to ensure that shooting delivers a net gain for biodiversity. They are aligned with international charters and principles. Its consultation on the principles is open until 30 June.

 

PROPERTY & DEVELOPMENT

Scotland: Review of the Tenant Farming Commissioner
The Scottish Government has completed its review of the Tenant Farming Commissioner role. A number of amendments to its current functions are recommended which include:

• Granting the authority to sanction and impose financial penalties on anyone found to have been in breach of the codes of practice

• Providing mediation services for scenarios where codes of practice have not actually been breached

• Extending the remit of the Tenant Farming Commissioner to include alternative business arrangements such as joint ventures and business partnerships

• For the Tenant Farming Commissioner to continue to be consulted on matters of land reform and agricultural tenancy

 

OTHER RURAL NEWS

And finally…
Gods of the farmyard
Of all the farmyard animals, the humble chicken is perhaps the last we would see as a divinity. Yet archaeological evidence suggests chickens as well as brown hares assumed special status among the Iron Age Britons. The animals were buried intact and with no signs of butchery. This corroborates accounts by writers of the time including Julius Caesar who said “The Britons consider it contrary to divine law to eat the hare, the chicken or the goose. They raise these, however, for their own amusement and pleasure”. In the Roman period both species were farmed and eaten, and rabbits were introduced, yet it seems that once Roman rule ended, chickens and hares regained their exalted status, at least for a period.