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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.