The Longer View

It’s like “Groundhog Day” – with less than two months to 29^th March, we keep going round and round in circles on the subject of the Northern Ireland border and, without resolution to this thorny subject, the prospect of a “No Deal Brexit” comes ever closer.

However, what will this really mean for our farmers? Well, as ever, the answer does not seem to be that straightforward. If we look at the beef and sheep sectors, which are often thought to be the agricultural sectors which will be most badly affected, the Agricultural and Horticultural Development Board (AHDB) have just published a booklet entitled “Brexit prospects for UK beef and sheep meat trade”.

In very simple terms, my understanding of this is that, on leaving the EU without a deal, we will start trading with the EU under World Trade Organisation (WTO) terms which will mean that the EU will impose tariffs on the UK as if we were a third country outside the EU with whom they have no particular trade agreements.

The range of tariffs imposed varies widely for different products, but the basic principle for beef and sheep are that there is a basic tariff of 12.8% charged on imports into the EU, plus a flat rate cash sum which is added to the above tariff. The cash sum from beef varies from €1,414 to €3,041 per tonne depending on the product and similarly it varies for sheep from €902 to €3,118 per tonne.

But what does this mean in real terms? Well, for beef based on 2017 figures, these tariffs would have equated to a tariff of between 61% and 113% depending on the product concerned and for sheep from 37% to 45%.

In addition to these financial barriers, the EU would then impose non-tariff barriers relating to food quality which will add from around 5 to 15% to the cost of exporting to the EU.

Tariffs and trade barriers of this scale will obviously have a massive impact on the competitiveness of our beef and sheep products being exported in to the EU, but this story is not quite that simple. One also needs to understand our existing trading arrangements and what our government’s attitude will be towards imports.

As far as beef is concerned, we import more than we export and we are not self-sufficient. Therefore, in theory, if the government decided to impose similar tariffs on imports, there would be increased demand for beef and domestic beef prices could rise. But, would the government tolerate the inevitable inflationary effect on food prices? If not, they could reduce tariffs and relax food standards on imports, thereby attracting cheap beef from countries like Brazil which would have a damaging effect on domestic beef prices for farmers.

Unfortunately for sheep farmers, there seems little prospect of any upside to a no deal Brexit. Around 90% of lamb exports go to the EU and, with tariffs approaching 50%, this would be a blow to our price competitiveness, which would be further exacerbated by fierce competition from New Zealand and Australia, which have free trade deals with the EU and elsewhere around the world. As a result, it is thought that sheep prices could fall sharply in the UK reducing sheep farmers’ incomes considerably.

Thus, it seems a no deal Brexit could have serious consequences for many livestock farmers.

For further information, please contact James Stephen from the Carter Jonas Rural team.

James Stephen
Partner, Rural
01823 428860
James.Stephen@carterjonas.co.uk

Renewable generation made up 33% of the total UK power generated in 2018, a two-fold increase from 2017. The jump was largely due to increased output from wind and solar generation.

Solar PV continues to be the fastest growing renewable technology in the world and the UK has become the European leader in solar deployment. Following the Government’s decision to close the Feed-in Tariff (FiT) scheme, which subsidised solar, development has slowed. However, significant reductions in the cost of panels and an increase in panel efficiency creates new opportunities for high energy users and landowners in a growing subsidy-free market.

Businesses with high on-site electricity usage are ideal for large-scale solar as the generation can be used to directly offset consumption. With power prices forecast to rise, solar installations help to futureproof a site against increasing energy costs.

There are also a growing number of developers looking for suitable land for large-scale solar installations, who are offering competitive rental terms for ideal sites with available grid capacity. These schemes, typically over 50MW, are requiring a smaller area of land for development than before, because of increased panel efficiency. The shift in the market is also prompting developers to seek to re-negotiate existing lease terms, to extend the operating period and to retrofit batteries, which landowners should seek advice on to ensure they benefit from the changes.

Whether connected to a building, or developed on land, a Power Purchase Agreement (PPA) enables solar generators to earn payments for both the energy exported to the grid and the associated ‘embedded benefits’. PPA’s can be negotiated with energy suppliers to optimise the income earned from a renewable asset and vary in length from 6 month terms to 20 years. The export market fluctuates like any other commodity market and is currently around 6-7p/kWh which is significantly higher than the current FiT export rate of 5.24p/kWh. Therefore, a PPA provides a competitive method of securing export payments on either a short or long-term basis.

For sites wanting to diversify further, batteries can be installed alongside solar to maximise income streams and increase site flexibility. Behind-the-Meter batteries can significantly reduce electricity bills by storing the generation and supplying power to the property at peak periods when electricity prices are at their highest, helping your business to avoid these higher cost periods. Alternatively, the generation can be exported back to the grid to take advantage of the various National Grid revenue streams, generating additional income for your business.

For further information, please contact Helen Melling from the Carter Jonas Energy team.

Helen Melling
Energy Specialist
0113 426 9868
Helen.Melling@carterjonas.co.uk

Securing planning permission needn’t be a hurdle to jump through. Instead, treat it as an opportunity to plan your diversification thoroughly, Charlene Sussums-Lewis says.

Securing planning permission is assumed by many to be the thorn in diversification’s side. Before you can get carried away with exciting plans, it’s vital to secure the necessary permissions and permits.

This important step has, historically, carried with it tales of biased councils, extreme delays and difficult hurdles to jump.

But Carter Jonas planning expert Charlene Sussums-Lewis believes these assumptions are unjustified, particularly when recent government changes and law overhauls designed to help speed up the process are taken into account.

“In July the government released the new National Planning Policy Framework (NPPF) which has its own dedicated rural section for the first time,” Charlene said. “It recognises the country needs housing and development in rural areas.”

Although the government’s housebuilding drive has typically focused on cities and towns, the Framework acknowledges growth in rural settlements is essential too.

“The NPPF recognises smaller settlements rely on the services of one  another and therefore the interplay between them can help achieve development in settlements which do not benefit from their own array of services,” Charlene said. “This is a positive step forward which largely echoes the findings of the Matthew Taylor Report which outlined concerns over rural communities becoming the enclave of the wealthy and retired. Supporting the vitality of rural communities through housing delivery is key to stopping the diminution of services and businesses.”

This, together with timescale targets for local authorities and changes to Permitted Development rights, has encouraged farmers and landowners to look at projects with a fresh pair of eyes.

By empowering landowners to covert buildings without needing to seek full planning permission, the government appears to have provided the means to fast-track building and diversification projects. However Charlene, who is based in the Carter Jonas Shrewsbury office, warns that although they have opened up more opportunities for landowners, there is still a strict process to follow.

“When you apply for Permitted Development you still have to give the council Prior Notification, which means you have to provide details of highways impacts, noise impact, contamination risks, flood risks, location, siting and design,” Charlene said. “They will then tell you if it falls within permitted development or if it’s gone too far and you need to submit a planning application.

“They can also write back and request further information – by which point, the ‘fast track’ system will have involved the same amount of information as that submitted with a planning application.

“Your local authority still has the final say as to whether you can proceed or not. However, needing to apply for planning permission isn’t the end of the world – the situation is very upbeat at the moment and there is no reason why a well planned project won’t be successful.”

When it comes to working up an application, rather than ignoring a scheme’s flaws, Charlene advises applicants to always be on the front foot.

“It doesn’t mean you have to do every report under the sun, but you do need to sit down and honestly identify the weaknesses in your scheme,” she said.

“If you know you haven’t got good access, or there will be ecological constraints, then look into these from the start because the problem isn’t going to go away.”

Diversification activities in particular are mostly looked upon favourably by councils because of the opportunities they bring to rural areas.

“The countryside is a living, working environment – it’s not just there for people to look at. People residing in rural areas need to make a living, so schemes that bring economic benefits to a location or provide job opportunities generally receive support,” she said.

For further information, please contact Charlene Sussums-Lewis from the Carter Jonas Rural team.

Charlene Sussums-Lewis
Associate
01743 213261
Charlene.Sussums-Lewis@Carterjonas.co.uk