News:

Predicated Boom In Small Scale Farm Windpower.

With renewable energy experts predicting over half of UK farms to have a wind turbine within five years, it is essential for all farmers and landowners to consider how their property could benefit from the latest boost to small scale renewable energy production.

Feed-in tariffs have recently been introduced by the government as a way of helping reach the UK target of producing 15% of all energy from renewable sources by 2020. These tariffs will provide a guaranteed payment for any excess energy produced and placed back into the local grid.

Depending on the provider a typical turbine for on farm use could cost in the region of £37,000 (installed) with predicted electricity earning and saving of approximately £10,000 per annum dependant on farm size and wind speed. HNR are currently acting on behalf of a number of interested farmers and Richard Brown comments; “this is essentially an investment and one which provides a reasonably quick return on capital, certainly compared to other on farm investments such as cattle sheds or a grain store.”

HNR state that whilst planning permission is required for these small-scale turbines the process will be reasonably straightforward and there are also grants available of up to 40% towards the investment. Please contact our offices to see how your farm could benefit from such a development.

HEXHAM AND NORTHERN RURAL

HNR continued to grow and expand its customer base throughout 2009 through a year on year increase in the workload carried out in all departments but particularly; planning, stewardship, rent reviews and land sales.

SOLD; LOCK STOCK AND BARREL……

2009 proved to be another successful year for HNR building once again on its growing reputation of being one of the leading agents for the sale of land and farms in the North East. Noteworthy sales included the auction of 251 acres of arable/grassland at Newbiggen, Lanchester, the further sale of 99 acres at The Middles, Waskerly and 61 acres of grassland at Dyke Nook, Consett by private treaty. Another high point of the year was the sale of the 800 acre hill farm of Puncherton, Harbottle, where in addition to the farm sale the firm also conducted the valuation and sale of the entire sheepstock and on-farm dispersal of farm machinery reinforcing its expertise and ability to handle the sale of any farm .…lock, stock and barrel.

UPLAND ENTRY LEVEL STEWARDSHIP

With SDA and SDA Moorland farmers soon to receive their final HFA payment, Natural England are currently in the process of launching its replacement; the Uplands Entry Level Stewardship Scheme. This new scheme will have a similar application process to that of the present Entry Level Stewardship Scheme and a payment rate of £32/ha on SDA and £15/ha on SDA Moorland. HNR have been told that the first application packs will made available in late February and in order to achieve the earliest 1st July start date and a subsequent payment on 1st December, completed forms must be submitted by 1st May. HNR have already requested existing client’s UELS application forms to ensure the best possible chance of completing and submitting them in time to achieve the earliest possible start date.

EVENING SEMINAR

On Thursday 25th February HNR are hosting a FREE evening seminar in conjunction with a firm of local Solicitors and Accountants at the Tynedale Function Suite. The theme of the seminar is one of how to maximise the benefit of using a professional in your business. A wide variety of topics will be discussed on the night from UELS by HNR to Tax Credits from Patricia J Arnold and a talk from Gibson & Co Solicitors entitled “Widow takes all? Not at all!” This should be a very worthwhile evening for all farming businesses. If you wish attend the evening and have not already received an invite then please contact our offices for availability.

ENTITLEMENT TRADING 2010

HNR are currently trading all types of English entitlements for sale. Please contact our offices if you wish to buy or sell any entitlements.

RURAL NEWSLETTER    JANUARY 2009

WIND FARMS, THE RACE IS ON

With the Government having set a target of 15% of total UK energy to come from renewable sources by 2020, demand for wind farm sites has never been higher. The North East is an extremely favourable location amongst the many renewable energy developers and there remain few landowners in the county who are yet to be approached in their hunt for an appropriate site.

We are currently acting for a large number of landowners on sites that are progressing in Co Durham and Northumberland. This work ranges from negotiating heads of terms for licences and option agreements to lease negotiations. In addition we also act for tenants of land that may have been earmarked for a potential wind farm development.

Whilst opposition to these proposals has a loud and very public voice, the substantial sums of money on offer still make it understandably crucial for landlords and owner-occupiers to seriously consider any genuine proposal.

If you have been approached by a developer or are interested in your site being evaluated for wind energy please contact HNR for a free and confidential consultation.

FARMLAND RENTAL MARKET

Many landlords and their agents understandably saw the undeniably profitable harvest of 2007 as an appropriate time to serve the required 12 months’ notice of a rent review on their tenants. However, it is those same parties who along with farmers witnessed the rollercoaster ride of agricultural profitability turn full circle during 2008. This was been played out most severely in the arable sector with fuel and fertiliser costs doubling and trebling whilst commodities have in some cases almost halved.

The impact of depressed commodity prices and inflated costs were compounded last summer by the region seeing some of the worst weather for a generation. Whilst a marginal improvement in autumn enabled the majority of winter crops to be sown, there remains a strong element of caution for 2009 prospects.

This air of caution also exists in the region’s livestock sector. Whilst it has enjoyed improved beef and sheep returns through 2008, these returns are coupled with increased costs and are on the back of two financially punishing outbreaks of foot and mouth.

Earlier this year, HNR’s Richard Brown was appointed a recommended professional for the Tenant Farmers Association and throughout 2008 represented many tenants on a wide range of matters and disputes including rent reviews.

“My involvement within a rent review can range from discussions where informal advice is offered to full representation in rental negotiations or arbitration.”

“During 2008 I witnessed a range of rental outcomes, but in truth there appears little justification for rents to increase in the current agricultural climate and it remains that each farm or parcel of land needs assessing on its own merits.”

For further advice on rent reviews or any other landlord and tenant matters please contact HNR and take advantage of a free initial consultation.

UPLAND ENTRY LEVEL STEWARDSHIP

Commencing in 2010, Upland Entry Level Stewardship (UELS) will replace Hill Farm Allowance (HFA). This new scheme under the Agri-Environment banner will be administered by Natural England to specifically target land classified as SDA and Moorland and will include Common Land.

In order to qualify for UELS the claimant must already be in Entry Level Stewardship (ELS). UELS will also act as a further strand in the same way for those in organic ELS. Higher Level Stewardship will continue to be available in uplands alongside UELS. Those in ESA or HLS will be ineligible to claim UELS until their agreements have run to an end. For this reason an “upland transitional payment” will be put in place from 2011 onwards to avoid unfairly penalising those farmers.

Payment rates will be £32/ha for SDA land below the moorland line and moorland parcels smaller than 15 hectares. SDA moorland over 15 hectares will be paid at £15/ha. These figures will be on top of existing ELS payments. Similar to ELS, entry into UELS will require farmers to meet a points threshold by meeting requirements selected from a series of land management options. Options will include; “cattle grazing on upland grassland, no supplementary feeding and haymaking.”

Whilst more information is still coming forward about the scheme, unsurprisingly its creation will result in winners and losers. Roughly speaking the bigger the farm (ie > 700 hectares (1730 acres)) the more chance of gaining from the switch from HFA to UELS.

Pilot testing took place last summer and final changes will be made to the proposed scheme during 2009. Natural England have confirmed that farmers will be able to have a UELS agreement commencing from 1st July 2010 with application forms available early 2010.

For more details about UELS or to be added onto our database of clients wishing to apply for UELS, please contact HNR.

SINGLE FARM PAYMENT 2008

Please note that a number of SPS claimants are currently receiving overpayment letters from the RPA for claims made during past scheme years. If you receive one of these letters please check with the RPA how they have calculated the amount and whether it is correct. This is critical as the letter will have no explanation (or show any calculation) as to how an overpayment occurred and consequently there is no way of checking. Please contact HNR for further advice if your payment has been affected.

On a more positive RPA note, you will no doubt be aware that a substantial number of single farm payments have now been received. As at the 31st December 2008, the RPA claimed to have paid approximately 59% of the UK fund value. This represents around 65% of the estimated number of claimants and a RPA target of 75% (by value) by the end of January.

INTERESTED IN A FREE SHED?

Whilst it has been poorly promoted, Catchment Sensitive Farming (CSF) is a land management scheme which was launched in 2006. It was established by Natural England with the aim of improving good soil structure and rain infiltration to avoid run-off and erosion; protecting watercourses from faecal contamination, sedimentation and pesticides; managing stock on farms to avoid compaction and poaching of land; and separating clean and dirty water on farms.

CSF Capital Grant Schemes have been offered annually in 2007 and 2008 to support farmers in priority catchments in England by providing grant aid towards the improvement or installation of facilities that would benefit water quality by reducing pollution.

The initiative was rolled out across 40 priority catchments in England in 2006. 10 new catchments have now been added, along with 7 extensions to existing catchments. Due to the schemes’ success throughout the rest of the UK, it has been decided to offer a third one-year CSF Capital Grant Scheme in 2009-10, which we are told will be launched in early 2009.

The priority area identified in Northumberland is the “Tweed, Aln, Coquet and Coastal Streams Catchment,” which takes in some 1,944 km2 and stretches from Berwick to Rothbury. Other smaller catchments exist within Cumbria, Durham and North Yorkshire.

Examples of the capital works and associated funding (2008/09 rates) for farms that fall within a catchment area include: Hard base for a livestock feeder £85/base; Watercourse crossing £360/crossing; Resurfacing of gateways £50/gateway; Roofing of silage clamps £50/m2; *Roofing of livestock gathering areas £45/m2; Relocation of sheep pens £2,250; Relocation of sheep pens & sheep dip £3,500; Hard core tracks £25/m.

Grant funding is available up to £10,000 per holding. Holdings are restricted to one application only.

For more pre-launch information or to be added onto our “request application form” list please contact Hexham & Northern Rural.

FARMING FINANCE - STILL OPEN FOR BUSINESS

FAF – the Rural Mortgage Specialists provides rural mortgages to those who live and work in the countryside. FAF specialises in financing rural properties and land - from small family farms to large estates, from barn conversions to large equestrian centres and from agricultural tied bungalows to prime country houses.

As part of NatWest, FAF are fully committed to serving UK agriculture, and will always aim to work with their customers on a personal level – listening to them and providing expert support and advice to ensure they get the right solution for their farm to help them compete in an ever-changing marketplace. With a direct line to a Regional Manager, FAF customers can look to them to provide a superior, specialist service that can add real value to their business.

Whether a farmer is looking for direct farm investment, is considering a diversification project, undertaking succession/retirement planning or wanting to simplify existing borrowing, FAF’s Farm Capital Loan allows customers to use the money for any legitimate purpose, whether farm-related or not.

NVZ NOW COVERS 68% OF ENGLAND ARE YOU COMPLYING?

Nitrate Venerable Zone (NVZ) rulings are changing. For holdings in an Existing NVZ the new rules were implemented on 1st Jan 2009, whereas holdings designated within the NVZ in 2008 the new rules will apply 1st Jan 2010. 

The new rules are part of the Statutory Management Requirements of Cross Compliance and non-compliance will result in deductions of Single Payment Scheme.

The new rules will cover: • Storage of organic manures • The livestock manure N farm limit • Planning nitrogen use • Closed spreading periods for organic manures • The organic manure N field limit • Closed spreading periods for manufactured fertiliser • Keeping nitrogen out of surface waters • Field application techniques

As a result of new NVZ rules significantly more record keeping will be required. Please call HNR for advice and assistance on putting these records in place and/or checking whether you fall within an existing or newly designated NVZ.

TAKING THE WORK OUT OF UTILITY WORKS

The majority of UK farms will have some form of utility apparatus which may range from a telegraph pole or pylon to a gas pipeline or water main. This will now and again result in a letter from one of these companies requesting access over your land to repair, upgrade or install new apparatus.

Whether or not you are happy to allow them onto your property is largely academic as these bodies have various statutory powers of access if required.

Prior to any works over your land HNR recommend early discussion and thorough negotiation with the utility firm in question to ensure your interests and requirements are properly considered (e.g. timing and access routes).

Invariably however, even the most conscientious of contractors will cause damage and create inconvenience. Fortunately utility firms are obliged to pay all reasonable compensation for any damage and disturbance caused as a result of their work.

In addition they will also pay all reasonable land agency fees where a farmer wishes to appoint an agent to act on his behalf.

If you as a landlord, owner-occupier or tenant are affected by any form of utility works, please contact HNR who regularly act to negotiate levels of compensation as well as dealing with easements and wayleaves.

Richard Brown of Hexham & Northern Rural has been appointed by the Tenant Farmers Association (TFA) onto their list of Recommended Professionals. The invitation by the TFA Committee makes Richard only the seventh appointment of a Chartered Surveyor onto their North Eastern regional list, which covers Northumberland, Co. Durham and Yorkshire.

In addition to the comprehensive professional experience gained within the tenanted sector, whilst working for the ambitious and expanding firm of chartered surveyors, Hexham & Northern Rural, Richard’s involvement in his family’s tenanted farm near Alnwick, make’s his appointment the ideal choice. Richard comments that, “Having previously been employed, and with a number of clients in Yorkshire, I am in the fortunate position of being able to offer knowledge and experience of rental markets throughout the North East of England.”

The TFA work closely with selected land agents and chartered surveyors across England and Wales and with many tenant farmers currently facing a rent review for the first time in over ten years, the Association strongly encourages them to seek professional advice to ensure their best interests are protected. TFA members are entitled to a free consultation with a recommended professional.

TFA Chief Executive George Dunn said “We want to ensure that our members have access to good quality, professional advice. Our regional panels of recommended professionals, which are overseen by our regional committees, are therefore very important to us and I am pleased to welcome Richard to the team”.

However following last autumn’s dramatic rise in arable commodity prices many landlords responded with the inevitable service of rent review notices for tenancies held under both the Agricultural Holdings Act 1986 and the Agricultural Tenancies Act 1995.

Following a period of stagnation in the rental market many landlords are now looking to secure substantial increases for rent in 2008 and for the arable sector this could conceivably see landlords seeking as much as a 50% increase. At the other end of the scale, when looking at hill farm rental it is very hard to see any landlord being able to justify any rental increase in this sector, in light of the second FMD outbreak in six years.

It is essential that any increase in rent can be sustained by farming businesses and while any rental dispute between landlord and tenant may ultimately be referred to arbitration it is always hoped that agreement between the parties can be reached.

Professional advice and knowledge of the local rental market is vital to achieve a satisfactory review. The basis with which rent reviews are conducted vary between the Agricultural Holdings Act 1986 and those of the more recent Agricultural Tenancies Act 1995 (Farm Business Tenancy Agreements). 1986 rents are assessed taking into account the terms of the tenancy, the character and situation of the holding, the productive capacity, related earnings capacity and recent comparable lettings. Whilst in contrast when carrying out reviews under the Agricultural Tenancies Act 1995, the FBT can contain its own rent review mechanism and criteria and care should always be taken to first check your tenancy agreement. If the agreement is silent the statutory provisions will apply and the rent must be reviewed to a level which the holding might reasonably be expected to let on the open market, taking into account all relevant factors.

For further advice or assistance on farm rent reviews please contact Richard Brown at the Hexham Offices.

Richard W Brown MRICS FAAV Hexham and Northern Rural Mart Offices Tyne Green Hexham Northumberland NE46 3SG

01434 607028 07974 706133

e-mail: rbrown@hexhammart.co.uk

DO NOT UNDERESTIMATE THE IMPORTANCE OF UK AGRICULTURE TO THE UK LAND MARKET

Escalating grain prices and the resulting hike in animal feed costs are beginning to open up a substantial divide in profit margins experienced between the arable and livestock sectors. This will range from continuous wheat farmers who are inline for the most profitable harvest this decade (depending on the quantity of the 2007 harvest that was forward sold) to pig producers experiencing substantial weekly losses as feed bills double and treble. Unfortunately this is currently being compounded by the unsatisfactory livestock prices experienced with a ban on exports and crippling movement restrictions imposed following the untimely return of Foot & Mouth in early September.

Nevertheless, it is this “feast and famine” climate that undoubtedly creates opportunities and allows for necessary change, expansion and restructuring throughout the industry. Historically agriculture has always evolved and adapted, with change a healthy and essential part of the industry.

Prior to and throughout the turbulent transition from production based subsidies to the current Single Farm Payment (SFP) regime, this element of change has been noticeably absent. Some three years on, farmers are comfortable with the stability brought about by SFP and accepting of its minimal impact on land values. Thus creating greater confidence amongst land owners who are now happy to place land onto what is a very buoyant market.

The increase in UK land values has been well reported to date. Demand for farms sold by Hexham & Northern Rural (HNR) has been largely fuelled by Irishmen with ever stronger purchasing power on the back of land values four and five times greater than our own. This, coupled with favourably low rates of interest; inheritance tax relief and the low risk investment status associated with land ownership (all helping to attract city and lifestyle investors) will ensure the firm market should continue.

Whilst the above factors are well documented, we must not forget the most important contributor to demand for UK farmland – the UK farmer. In 2006 over 50% of farms were reported to have been successfully purchased by active farmers - a statistic upheld throughout the last 12 months across HNR sales of land in excess of 1400 acres.

Conversely, it is for many of these factors that there remains a massive shortage of land for sale and land prices continue to hit record levels. However, what is apparent is the number of farmers, often livestock, (who like arable farmers in 2005) are now wishing to arrange the letting or contracting out of their land. What is encouraging and a good indicator of the level of optimism remaining in agriculture is the large volume of interest that is continually expressed in farms to let, from bare arable land to upland hill units.

Although we are often reminded that the average age of farmers is 58, it is HNR’s experience that there is a strong contingency of determined young, agri-business farming families who are willing and able to take opportunities when they arise. For every farmer wishing to surrender a tenancy, there would appear to be several eager to take their place. With the majority of letting farms being offered separately from SFP entitlements, all budgets accompanying tender forms must detail efficient farming practice with each enterprise being entirely self supporting. This applies from arable land where production is king to upland units where potential tenants must seek to achieve the correct agri- environmental balance to ensure best profitability.

 Therefore, whilst we continue to focus on the external factors affecting the modern farmland market, we must not forget that it is the relentless drive for farming efficiency, diversity and bravery to expand, which ensures developments in agriculture and ultimately underpins demand within the UK farm land market. For this reason Surveyors at HNR consider it an essential part of their job to help farmers facilitate change through the sale, letting or contracting out of farms to benefit the individual as well as the industry and market as a whole.