Smallholdings: State of the Nation

The county smallholdings estate is generating an operating surplus of £16.1 million from more than 2,500 farms covering an area of 86,700 hectares let as smallholdings.  In the words of the report from which these data are taken:

Whilst the data set is incomplete this report indicates that council farms continue to play an important role in the tenanted agricultural sector across England covering approximately 86,700 hectares of agricultural land providing approximately 2,583 holdings for around 2,081 tenant farmers. About sixty percent of the lettings are equipped farms (1,536 equipped holdings) and 49 lettings were made to new entrants during 2015/16. The report shows that the reporting smallholding authorities generated a revenue account net surplus of just over £9.5 million in 2015/16.

What more can be gleaned from the 66th Annual Smallholdings Report from Defra? Continue reading “Smallholdings: State of the Nation”

Defra: a challenging brief

The Conversation asked me to write an appreciation of Owen Paterson’s tenure as Secretary of State for the Environment. It was published last night under the title, Badgers may cheer Owen Paterson’s exit from Defra, but not everyone feels the same

A white, middle-aged, country man who nevertheless forgot to take his wellies to a flood zone a stone’s throw from one of his infamous badger cull areas, now finds himself culled. Is this how we should remember the Rt Hon Owen Paterson MP, Secretary of State for the Department of the Environment, Food and Rural Affairs, September 2012-July 2014?

Paterson’s appointment to Defra was popular with farmers and landowners because he was seen as one of their own: MP for that most rural of constituencies North Shropshire, and a leading figure in the European tannery trade. Defra was badly in need of a safe pair of hands after Caroline Spelman’s disastrous attempt to privatise the Forestry Commission. Moving across from the Northern Ireland brief, Paterson was to prove an able choice in this regard.

That is not to say the Defra tractor ploughed a steady course during his tenure. Continue reading “Defra: a challenging brief”

CAP: Agric Fundamentalists v Enviro Fundamentalists – some inconvenient points

Decision week for Defra Secretary Owen Paterson.  He is due to announce the ‘modulation’ rate for England by the end of the week.  Will it be 9% as the NFU wants, or 15% as the RSPB demands?  Modulation is EU-speak for the amount of farming support that is diverted (modulated) into more general rural development and environmental schemes.  So the more money that is modulated, the less the direct farm payments through the Basic Farm Payment which will soon replace the Single Farm Payment.  The BBC provides some of the background here.

Last weekend saw a crescendo of lobbying on the issue, with the RSPB taking out full page national newspaper advertisements and the NFU writing to all MPs.  Some of the mood of the debate is caught in Mark Avery’s Sunday blog: all households will have to pay £400 to support farmers; this is nothing more than a payment for owning land and farming it (whither tenant farmers?).  On the other hand the NFU whinges that German farmers are only subject to modulation rates of 4.5%, French farmers 3% and the proposed Scottish rate is 9.5%.  This will hurt competitiveness, says the NFU, and disadvantage English farmers.

The environment lobby makes much of the ‘value’ that we get for CAP payments.  The more money that goes to Pillar II (EU-speak for the budget that pays for environmental and social goodies), the better. But farmers prefer Pillar I (EU-speak for the budget that pays for direct farm support payments) because that relates directly to the land they farm and how they farm it – and this can be defended strongly on grounds of food security (will you starve or me?).

But of course we are dealing with public policy here, and the reality is more complex that the advocates of Pillar I and II would like us to accept.  The new direct farm payments come with more environmental strings attached – crop diversification and ecological focus areas for example.  And more of the money is moved uphill – where it is desperately needed because much of upland farming is economically marginal at best – at the (moderate) expense of lowland areas.  Whatever Pillar II funding we are left with, will be far more focussed than previously – a better deal on the 35% of rural land which will benefit compared with the previous 70%?  Perhaps so if you are in the lucky areas; perhaps not otherwise – although tougher conditions on the Pillar I funding may make up the difference in some lowland areas.

The RSPB and others have set out their case for the ‘value’ we receive in return for our £400 per household.  This is a compelling and attractive case, immediately attractive to anybody who pays tax.  Given the propensity of Avery and others to dismiss the CAP payments as a mere subsidy on land ownership and farming, I have been pondering what we do get for the money we spend on farm support.

This is an incredibly complex question once you factor in food security and social justice.  To take some dairy figures, our consumption of milk products works out as follows:

Taking our daily consumption of fresh milk, butter, yogurt, cream, dairy desserts we on average consume about 4 litres of raw milk a week.  That’s a little over 200 litres a year.  With an average dairy cow now producing 7,327 litres a year, that means each cow is supporting 36 people.  This typical cow requires 0.5 ha  of land a year, and lives in an average herd of 125 cows.  So the average herd is providing dairy produce for 4,500 people.  At a direct CAP Single Farm payment cost of just over £200/ha, this equates to a cost per consumer supported with dairy products of just under £3.00/year (1).  Doesn’t seem much, but let’s cut the CAP farming support payments altogether.   What happens next?

There is little doubt that the main buyers of milk from farmers have an excellent idea of the costs of production – including the effects of farming subsidies – and set their prices accordingly.   Ergo – exit CAP, enter higher payments from the main buyers.  Despite the hyperbole to the contrary, the main farm produce buyers have no interest in the financial failure of their principal suppliers.  So prices are adjusted accordingly to make it worthwhile – but only just so for better than average producers – to continue to supply milk.  In compensation retail prices increase – for everybody.

So if you are hard up, milk has just gone up and you won’t save much tax if you weren’t paying any or much tax anyway.  But if you are better off milk, yogurt, cheese etc has also gone up, but the CAP isn’t costing you so much through your tax bill.  That’s to say that another element of redistribute taxation has been lost.

Meanwhile at lower rates of modulation fewer farmers are encouraged (forced?) to look at the financial effiency of their operation.  At the recent LEAF conference, Martin Wilksinson (HSBC Head of Agriculture) made the point that many farmers could more than make up their CAP losses with improved technical and financial effiency.  This is one of the real challenges to the farming industry: to move more farmers to the standards of the best.  England was the first region in the UK to move to Single Farm Payments based on the same average payment, away from a payment based on historic payments.  Wales and Scotland have been slower to move in this direction, and there seems a compelling case for England being better prepared for this round of CAP reform as a result.  One fear for the environmental lobby might be the real danger that some of the best lowland farmers may move away from CAP support altogether, joining those sections of the farming industry which have never had it anyway (eg pigs and poultry).

Meanwhile farmers need to promote the value we get from Pillar I payments by stressing any benefits they provide to the rest of the country as consumers and taxpayers.  For example, how many people is your farm feeding?  And at what cost in public support?  Will Santa be coming early for the farming lobby or the environment lobby?

-oOo-

Footnote 1: These calculations were surprisingly hard to source.  The DairyCo website provides daily consumption figures, and the average herd size and milk yield are available from Defra statistics.  DairyCo also provides a diagram showing how the UK’s milk supply is utilised.  My approach was to take the daily consumption of the dairy products listed (a list which is not complete) and work out how much raw milk is needed for each product, eg about 20 litres for 1 kg of butter; 10 litres for 1 kg of cheese.  This ignores some of the complexities of dairy processing, for example milk from which cream has been separated may reappear as another milk product and so on.  Some arithmetic followed based around stocking rates (0.5 ha/cow), total production/consumption figures and lowland Single Farm Payment Rates per hectare in the last year or two.  In short, lots of assumptions; lots of scope for error – but if anybody can highlight any errors or better still existing sources of information like this I would be delighted to know.

 

The Prince of Wales, Country Life and our countryside heritage

The Conversation is a website sponsored by several universities and others, with the aim of combining academic rigour with journalistic flair. Environment Editor Michael Parker asked me to appraise Prince Charles’ editorial in the Country Life, and this is the article published by The Conversation on Friday 15 November 2013.

Charles: the future

king with retro-

vision

By Charles Cowap, Harper Adams University

In this week’s Country Life HRH Prince of Wales writes of the social and economic importance of farming. It is, he says:

the bedrock of our rural communities, making post offices, pubs, public transport and local health care absolutely vital to the production of our food and the protection of the landscapes we all benefit from in so many ways. This is why the countryside’s contribution to the national good has to be cherished and sustained. Without it, we will all be very much the poorer.

Elsewhere in his editorial HRH writes of the British countryside as the backbone of our national identity. Setting aside for a moment just what the 21st century British identity might be, what about the many generations of seafaring, war, empire, trade, or the industrial revolution? We need only go back to 1701 to see Daniel Defoe’s characterisation of “The True Englishman” in his typically satirical way.

HRH identifies several champions or “heroes” of the countryside, and what an interesting and in some ways inspiring group they are. But heroes? Have they unflinchingly stepped forward to meet terror, risking all for their peers? And can we really say that using helicopters to ferry in material for dry stone walls is a sustainable way to manage the countryside? Here are a few others who we might also recognise for championing the countryside:

  • WG Hoskins, 1908–1922, who taught us to understand the countryside, not least through his The Making of the English Landscape.
  • Octavia Hill, Hardwicke Rawnsley, and Robert Hunter, founders of the National Trust.
  • Kenneth Watkins, founder of the Woodland Trust.
  • Countless agricultural pioneers and innovators including the likes of Bobby Boutflour who did so much to revolutionise dairy farming and cattle nutrition.

Who would be on your list?

HRH rightly recognises the vital role farmers have in feeding us and as custodians of the countryside. But there is a contradiction when he goes on to lament the decline in genetic diversity in livestock, the deteriorating condition of soil and the short herd life of some cows. The Irish potato famines are blamed on lack of genetic diversity with no mention of good rotational practice and other vital aspects of crop husbandry. Can this be a description of the “best farmers in the world” as Prince Charles says?

Contrast this with the views expressed by Allan Wilkinson, Chief Agricultural Adviser to HSBC at the Linking Environment and Farming Conference (LEAF) this month. Wilkinson noted that the performance gap between the best farmers and the rest has always been large – it is now enormous. Wilkinson’s menu for success included attention to detail, good up-to-date knowledge, personal development, looking for ways to collaborate, recognising and respecting the competition.

Price pressure

Prince Charles makes the point that the “big retailers and their shareholders do so much better out of the deal” than the farmers they buy from. He also laments the enormous waste of food in the UK every year. Perhaps some of these retailers understand farming and consumers rather more than we recognise. Increasingly we see the big supermarket groups working with preferred groups of suppliers. During the recent milk price crisis, Tesco was recognised for being more supportive of its producers. In addition Tesco has also just produced its own analysis which revealed the waste of 30,000 tonnes in the first six months of 2013, a vast tonnage lost along the supply chain “from farm to fork”. Losses start in the field, and continue right through to the final consumer.

Waste is not the only problem with food: overconsumption leads to health problems, as are changing patterns of consumption in developing countries. But while many have plenty to eat we have also seen the rapid growth of the Food Bank movement in response to a shameful economic and social need. The Trussell Trust has seen its work triple. It is now rumoured that the publication of Defra research completed in the summer is being suppressed because it links the boom in food bank demand with welfare reforms. Perhaps our list of heroes needs to include Carol and Paddy Henderson for establishing the Trussell Trust in 1997 (named after Carol’s mother whose legacy made it possible).

Like much of what HRH has written about the countryside and farming, there is little to grasp in the way of a broad view of the future of the countryside, much less how to get to that future. The countryside as romantic idyll certainly seems central to his view of the countryside, yet how will that idyll be maintained?

Investing in the countryside, but where?

There are some surprising omissions from Country Life’s editorial. For example, the government is currently consulting on the implementation of the latest changes to the Common Agricultural Policy (CAP). Here is something which really does shape the countryside, and Defra has given us 28 days to respond to its consultation exercise.

Should we move the remaining money “up the hill” to support the beleaguered upland farmers mentioned by Prince Charles? HSBC’s Wilkinson and Tesco would both probably tell us that there is plenty more that the lowland farmers can do for themselves to improve profitability and farming sustainability. There is a strong case for diverting more of the public money to the marginal farming areas – not to support agriculture as such, but to maintain its value in supporting the rest of the industry “down the hill”, and for the numerous environmental and social benefits it can bring us all.

It is a shame that HRH does not seem to tackle this central issue of the extent to which public money should continue to support farming, what value we get in return for it, and the considerable amount of work which is currently underway looking at how we can reflect the much wider value of nature in the management of natural capital and the “purchase” of natural benefits from ecosystem services. All vital considerations in establishing a rural vision which builds on the best of a rural idyll.

Charles Cowap is a member of the Royal Institution of Chartered Surveyors, the Central Association of Agricultural Valuers, and non-executive Director of Management Development Services Ltd. He works as a rural specialist and land consultant for various companies and on various projects developing ecosystem service approaches, and providing training.

The Conversation

This article was originally published at The Conversation.
Read the original article.

Biodiversity offsetting, peat, conservation covenants and newts on the move

Defra, the UK Department for Environment, Food and Rural Affairs has issued a consultation paper (Green Paper) on biodiversity offsetting and development.  This paper represents a major government commitment to the introduction of biodiversity offsetting as a means to mitigate the environmental impact of development.  Government plans to have definite proposals ready by the end of this year.  Comments are invited by 7 November.

How is it likely to work?  There are already trials underway and Defra has developed a simple ‘metric’ to determine the ‘biodiversity units’ lost to development, and therefore how many units must be offset by positive environmental work elsewhere.  The Green Paper gives a simple example of how this works for a supermarket development on a site which is part derelict, part arable land and part woodland.

A number of questions flow from this: must replacement be like for like, or can one sort of habitat be substituted for another?  Hedgerows in the pilot schemes must be replaced by hedgerows for example, on a ratio of up to 3 new for one lost.

Is this a developer’s charter?  Continue reading “Biodiversity offsetting, peat, conservation covenants and newts on the move”

Spending Review 2013: Looking for agriculture, environment or rural? Don’t bother

Chancellor Osborne today set out his Spending Round for 2015-16.  Widely mislabelled as a Comprehensive Spending Review, the review only relates to one year – the year in which the next General Election will take place.  It doesn’t offer much hope for the countryside, but there could be some interesting implications for rural property and land in general.

The headlines include:

  • Osborne had to achieve £11.5 Bn overall in cuts
  • The overall emphasis is on growth and public service reforms, with an emphasis on localism, efficiency and fairness
  • A big requirement is to keep mortgage rates low – probably good news for property and housing markets (and a wider-scale disaster if they are allowed to rise)
  • £50 Bn capital spending infrastructure in 2015, covering roads, railways, broadband and flood defences (but see more below).  More on this will follow on Thursday, but likely candidates include improvements to the A14, HS2 and the Mersey Gateway Bridge
  • Schools and tax inspectors will benefit from increased funding
  • Ed Balls for Labour says we should be spending £10 Bn on infrastructure now, while the Institute for Fiscal Studies says we are stuck with austerity until 2018

Important points for the countryside include:

  • Defra subject to further cuts of £37 million by 2013, with its overall budget going down from £2.2 Bn in 2011-12, to 1.9 Bn in 2013-14, £1.7 Bn in 2014-15 and £1.6 Bn in 2015-16 (a year on year cut of 9.6% from 2014 to 2016)
  • Defra has recently been likened to a fourth emergency service for its role in flooding, animal and plant disease (think Foot and Mouth Disease and Ash Dieback), food scandals (how we miss those horseburgers) and Bovine TB.  Flood defence spending is to be maintained in CASH terms, but of course the REAL terms story will be different
  • Defra’s settlement includes £40 million for South West Water in 2015-16 to defray south western water users’ bills
  • Meanwhile Defra has to achieve £54 million in efficiency savings in 2015-16.  This will be achieved by reduced EU fines for non-compliance and greater efficiency in its Arms Length Bodies (Rural Payments Agency, Environment Agency, Natural England) for example by sharing back office functions
  • Meanwhile Defra is to prioritise spending on ‘economically high value areas’ (geographic? Subject?).  This could be one to watch
  • Energy and Climate Change comes with a new emphasis on renewables and a commitment of £430 million for Renewable Heat Incentive, proposed new tariffs and a higher budget cap for RHI payments
  • Food Standards Agency to see a cut in funding from £94 million to £86 million from 2014-15 to 2015-16
  • Funding for science is to be maintained and enhanced, £4.6 Bn in 2015-16

For property and land, big news will come on Thursday with the announcement of Infrastructure Plans.  For the moment we know:

  • £100 Bn infrastructure spending planned for the next Parliament.  This is for transport, science, schools, housing, broadband and flood defences although it looks as if parts of large scale broadband investment may become a voucher scheme for small businesses
  • This should equate to £300 Bn infrastructure spending to the end of this decade
  • £9.5 Bn to be spent on the transport network in 2015-16
  • This will also cover 180 new Free Schools, 20 Studio Schools and 20 University Technical Colleges and Business Centres in all the major trading centres in China

On a smaller scale, Defra and DECC (Department of Energy and Climate Change) have both been targetted with spending £3 million each in the government’s Small Business Research Initiative in 2013-14.  This scheme runs across government and all departments are expected to make better use of it.  It should allow innovative companies to solve specific public sector needs in new innovative ways, so perhaps an opportunity or two here.

Search diligently through the key details document, HM Treasury, Spending Round 2013 for the words environment, climate, rural, agriculture and farming and you won’t find much.  Climate change comes up in terms of fairness – we are committing £969 million to supporting low carbon growth and adaptation in developing countries.  Other than that you’ll only find climate and environment in the appropriate department’s names (Defra and DECC), and you won’t find farming, agriculture or ‘rural’ at all.  Well done on rural proofing this one government!

So what should the land manager, farmer or rural business consultant take away from all this?

  • Of far greater significance for farming as a whole will be the CAP reforms, now possibly in the final inches towards an agreement today
  • With voluntary modulation looking like 15% in England, this could add up to 20% cuts in Single Payments for English farmers
  • And after Cameron’s little regarded EU Budget deal, it looks like 22% less funding for rural development as well
  • Meanwhile Thursday’s Infrastructure Announcement is the one to watch – will there be a new road, fibre-optic cable or railway coming to a field near you?  And will it be an opportunity or a threat to your business?

Pilot UK Peatland Code

Follow this link for details of an event in London on 10 June to learn about the new Peatland Carbon Code, to meet the team responsible for writing it and to provide your initial thoughts and feedback in preparation for a pilot project to start in September this year.  Or go to this link to book a place directly.

For details of the event: http://www.iucn-uk-peatlandprogramme.org/initiatives/PeatlandCode

And to book a place: http://peatlandcode.eventbrite.co.uk/#

Look forward to seeing you there.