New numbers reveal subsidy reliance

Defra’s Total Income from Farming (Tiff) figures always make for interesting reading when they are released on a regional basis. While the 2021 numbers are encouraging in that they show a general increase in incomes across England, the continued reliance on subsidy payments – in one region they account for almost 90% of income – is food for thought. The post-Brexit equivalent of the EU’s Basic Payment Scheme is going to be tapered down quickly and its replacement, the Environmental Land Management Scheme (Elms), is unlikely to offer a like-for-like replacement (and the government has made no funding commitments beyond the next General Election anyway) so farmers need to focus urgently on their core profitability and then look at new income streams. According to one new report, over ￡1 billion of renewable energy payments is going begging!

Do get in touch if we can help you navigate through these interesting times and sign up here if you'd like this update to arrive directly into your inbox each week

Andrew Shirley Head of Rural Research

In this week’s update:

? Commodity markets – Milk output soars

? Farm incomes – Regional breakdown released

? Autumn statement – Safeguarding tax reliefs and wages

? Solar – Billion ￡ missed opportunity

? Slurry – New grant scheme opens

? Planning – NIMBY amendments prompt rural stagnation fears

? The Farmland market – Video and podcast update

? International news – Australian lamb not changing climate

Commodity markets – Milk output soars

I don’t include milk prices in this commodity round up because they are only updated monthly and the numbers are quite historical by the time they are released. However, the latest figures from Defra make for interesting reading. The average UK milk price in September was just shy of 49p/litre, 4% up on the month and 55% higher than 12 months’ earlier. Unlike the egg sector it seems that increased retail prices are being passed back to producers. The boost, in conjunction with unseasonably warm weather, saw the highest levels of production – just over 1 billion litres - on record during October, according to levy body AHDB.

Farm incomes – Regional breakdown released

Defra has just released detailed 2021 Total Income from Farming (Tiff) figures?on a regional basis. All parts of England, bar the North West (-8%) and the South West (0%), recorded an increase last year. Arable areas, such as the East of England saw the strongest growth and also the highest overall incomes. Livestock dominated areas, like the North West, were most reliant on subsidy payments to support farm incomes. Overall, almost half of Tiff for England was made up of subsidies.

Autumn statement – Safeguarding tax reliefs and wages

Following Chancellor Jeremy Hunt’s?recent Autumn Statement?a few areas worth noting have emerged. I’ve already reported the extra resources that HMRC has been allocated to prevent tax evasion, which could increase the focus on Agricultural Property and Business Property Relief claims. Off the back of that my colleague Tom Heathcote has wisely suggested that landowners need to pay particular attention to contract farming, share farming and grazing agreements. In many cases, Tom feels the way these are worded or administered could put any APR or BPR claims at risk.

The decision by Mr Hunt to freeze the level at which the 40% rate of income tax kicks in could also have an impact on farm employees and their salary negotiations. Skilled farm workers, especially those working overtime during busy periods like harvest, could now fall into the higher rate tax bracket, previously considered the preserve of professionals.

For help on structuring land occupation agreements please contact?Tom. To sign up for a copy of our latest Estate Staff Salaries Survey, which is due out soon, please contact?Alastair Paul.

Solar – Billion ￡ missed opportunity

I’ve commented on the government’s negative attitude to ground-mounted solar farms in previous updates, but now?a new report?has quantified how much cash farms and estates could be missing out on. Published last week by the Energy and Climate Intelligence Unit, the analysis reveals that 78% of farms in England have no renewable energy generation installed onsite. But if all farms that could install solar did so, they could generate over ￡1 billion in just two years from 2023. Politicians worry that using farmland for solar schemes could harm the UK’s ability to feed itself, but only 0.1% of agricultural land, much of it relatively unproductive, is covered in panels. For advice on how to maximise the solar potential of your property, including 100% funded rooftop installations,?please contact Robert Blake.

Slurry – New grant scheme opens

Livestock farmers in England looking for help to expand their slurry storage capacity will be able to apply for Defra’s?new Slurry Infrastructure?grant from 6th December. The grant will also fund the fitting of impermeable covers on grant-funded stores. For help with this and other schemes please contact our grant-funding expert?Henry Clemons.

Planning – NIMBY amendments prompt rural stagnation fears

I just spied an interesting and?strongly worded blog post?from the CLA that expresses the organisation’s frustration at a series of amendments to the Levelling Up Bill, which it hoped would make the planning process in rural areas easier and prevent the decline of villages. It labels the amendments, which focus on removing housing targets, prioritisation of local plans over new national planning policies, and allowing for more appeals on planning applications and were proposed by former Defra Minister Theresa Villiers, as Nimbyism. The bill, which has been much delayed due to the transition between governments, was due to reach the report stage on Wednesday, where the proposed changes would have been debated in the House of Commons. But this stage was pulled by the government because of the increasing momentum behind Ms Villiers’ amendments.

The Farmland market – Video and podcast update

As mentioned previously, our?Q3 Farmland Market update, which reveals a sharp annual increase in average farmland values, is out now. If reading research reports is not your thing, I’ve packed the key findings into a?60-second video?that you may find interesting. You can also listen to my colleague Jessica Waddington and me discuss the farmland market with Knight Frank’s Global Head of Research Liam Bailey in an edition of our?Intelligence Talks podcast.

International news – Australian lamb not changing climate

Livestock farmers generally get a bad rap from environmental campaigners these days for the supposed contribution their animals make to climate change. However,?a report?from down under, forwarded to me by farm sales colleague?Andrew Blake, claims that the Australian lamb sector should now be considered climate neutral. The research shows that the?radiative forcing footprint?of Australia’s sheep meat sector has plateaued over the past 30 years and reached the point of a net zero increase in 2020.