Goodbye 2021, hello 2022!
Thomas Armstrong, Director for H&H Land & Estates, reflects on the highs and lows of a dramatic year and contemplates the future of farming.
“What a year this has been, with everyone trying to cope with the fallout from Covid, adjusting to a post Brexit Britain, waiting for detail of the new payment schemes, and most recently dealing with the devastation of Storm Arwen. All this whilst simultaneously working with the challenges of normal farming life. It has certainly been a year of extremes”, comments Thomas Armstrong Director and Chartered Surveyor of H&H Land and Estates.
“Looking at the positives, we were fortunate to have good weather through the summer and an excellent autumn, and there have been exceptionally strong commodity prices for farmers across all sectors. A positive result of Covid may be, that it has reset the base value for the food that our farmers produce. As a result of lockdown, we have also found more people keen to shop locally, resulting in a strong demand for high quality local produce, so hopefully this will continue.
Farming has also found a new and articulate champion for agriculture in the form of Jeremy Clarkson, whose programme has led to a much greater understanding by the public, of the role farmers play in their daily lives, and the ongoing challenges they face.
Throughout the year across all our offices, we have seen an ever-increasing demand for property and land, which has pushed prices up to unprecedented levels throughout the North of England. For example, a derelict stone barn sold in September made 135% over its guide price. Demand has outstripped supply for all types of property, from small holdings to large farms, agricultural land to amenity land. Despite the difficulties of Covid, or maybe because of them, we think this trend will continue well into next year.
There are of course other factors which certainly have the potential to drive demand for land even higher. Following the adoption of the Environment Bill there is increasing interest in acquiring land for environmental benefit such as carbon sequestration and biodiversity. There are also other environmental initiatives, including the drive to increase renewable energy using solar panels and wind. Conversely there is the conflicting demand of developers ever hungry for land to meet housing needs. It really is a case of looking into a crystal ball when it comes down to how much farms and land will sell for in 2022.
Another positive of 2021 has been livestock prices, and with the exception of the difficulties faced by the pig industry, there has been unprecedented demand for both pedigree and commercial sheep and cattle. However, these positives must be weighed against the dramatic rise in the price of fertiliser, feed, electricity, and diesel.
One sector which has seen significant growth across the North has been domestic tourism, and for those farmers who had diversified, they were able to reap the benefits. Although demand has been at a premium because of travel restrictions and health concerns, I think that the trend for more UK based breaks will continue for the foreseeable future. So, for those farming enterprises considering tourism diversification, there are still opportunities to be seized.
Although further details have just been announced, the limited information regarding any future farming schemes has been a problem. Everyone in the industry, farmers and professionals alike have been looking for clarity and robust frameworks and calculators to work from, to see what’s going to happen to enable the industry to move forward.
One major challenge that so many industries are facing, and it is one which I think will be difficult to overcome, is the shortage of labour. The lack of willing and able European workers to help our sector has been greatly exacerbated by Brexit, and it will be vital to get that message across to the Government. Albeit that we have increasing mechanisation, unless farms can attract a good workforce, the ability to expand will be limited.
Sadly, Covid has really taken its toll on the mental and physical health of the farming community, and we can only hope we are now over the worst. Farming is a lonely occupation at the best of times and at the worst, it can be depressingly so. It is great to have our marts back open so that once again people can meet up and socialise.
Despite these difficulties I feel very optimistic about 2022. I think Covid has reset everything and that high prices are here to stay for both property and produce, as there is a limited supply of both.
Of course, the words which are on everyone’s lips are: Carbon Monitoring and Net Zero. We will have to move towards more sustainable farming methods which will require the industry to challenge itself. We must accept that there is a lot that we can do to improve our emissions and use of technology within farming and there is certainly help and support for farmers to work towards their Net Zero targets.
Although change is always difficult, it can open new and profitable opportunities. However, if a farm is solely reliant on the Basic Payment Scheme to make the business work, some changes will have to be made, because the new Sustainable Farming Incentive scheme is certainly not a replacement for BPS.
My advice is, don’t rush into selling carbon credits off farm. Weigh up all the options and take into consideration any offsetting that may be required for the farm itself in the future. To help reduce your carbon output and increase your efficiency, take advantage of any grants that are available for equipment and technology, but only if they improve your business. This is exactly what these schemes are designed for.
Another real positive is our next generation of farmers, who are keen to embrace a greener future and look at new and different opportunities. I very much hope that there is good uptake of the DEFRA Lump Sum Payment for those looking to retire, as this will result in there being more farms to let and open the door to new entrants in farming.
So, let’s say goodbye to 2021 - a roller coaster ride of ups and downs, and hello to 2022, while keeping our fingers crossed there are no more “unknown unknowns”, to knock us off course!”