Rules Need Clarifying

Confusion reigns as to whether farmers can continue claiming Single Payments where they graze sheep under solar panels and in my view the Rural Payments Agency should be called to clarify the rules urgently.

At present the advice contained in the 2013 Single Payment Scheme Handbook is not entirely clear. It states that, “the area taken up by the solar panels is ineligible, unless the area under it is capable of being grazed. If the primary purpose of the land parcel is for agriculture, the rest of the land parcel will be eligible. If the primary purpose of the land parcel is for operating solar panels, the whole land parcel is ineligible.”

The problem here is that in very many large scale solar parks, the land underneath the panels will be planted to grass which may well be capable of being grazed by sheep for example and so on the face of it, this land may be eligible for claiming single payments. However, in my view it is questionable whether it can be argued the primary purpose of the land parcel is for agriculture.

Accordingly my advice to farmers is not to claim the land under solar panels as being eligible for claiming single payments. This is because I believe it is hard to claim that the “primary” use of the land is for agricultural purposes, otherwise why would a farmer or developer have gone through the expense and hassle of obtaining planning consent for the solar panels and then spent millions of pounds erecting them on the land in order to generate electricity, the value of which will eclipse the value of the grazing which may be available for a few sheep.

If my thinking proves correct, this will result in many thousands of acres of farmland becoming ineligible to claim single payments which will result in a matching number of single payment entitlements coming on the market to be sold. The significance of this is that we are currently moving towards the trading deadline of 2nd April for entitlements to be sold and claimed on in 2014. If a significant number of “solar panel entitlements” now hit the market it is likely the price will plummet because there will effectively be more entitlements available than there is eligible land to claim them against.

If of course my interpretation of the rules is incorrect we will have the peculiar situation of farmers being paid a subsidy to graze the land under solar panels which in themselves are also receiving significant support payments to produce renewable energy. This does not seem appropriate and so I think it is important that the rules relating to this issue are clarified as soon as possible.

James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk

Farmers Team Up

Last week I was contacted by John King, a farmer from East Harptree who became involved with the evacuation of 500 cattle for James Winslade’s farm near Moorland. He had heard of the farmer’s plight through social media and decided to help. But I am not sure when he set off that day he was expecting to be so profoundly moved by what he experienced which has stimulated him to continue providing support to those whose lives have been so badly disrupted.

Initially there had been a call for Land Rovers and trailers to help move the stricken cattle but it soon became clear that the flood waters were rising so fast that even Land Rovers were not going to be up to the task and so John set off to meet at Burrowbridge with his tractor and cattle box to see if he could help.

On arrival he was directed down the already flooded road towards Moorland which was delineated by electric fence posts so he could see the edge of the road. However, these fence posts were soon submerged leaving those involved with the rescue having to guess the limits of road which on occasions was very precarious with deep rhines and the swollen waters of the River Parrett often only feet away.

The first load of cattle were removed reasonably easily to the safety of Sedgemoor Market, which has been acting as a collection centre for both evacuated livestock and fodder and bedding which has been donated by farmers from as far afield as Scotland, northern England and East Anglia. However, by the time John retuned to pick up a second load, there were calves up to their bellies in flood water and older cattle up to their hocks. It was a terrifying experience for the cattle and not much less so for the people involved.

But what it did leave John with was an immense feeling of empathy for those who had lost their homes to the flood and for the farmers whose livelihoods will be profoundly affected for months if not years to come. As a consequence John has taken on the role of co-ordinating fodder and bedding donations from farmers in the Mendip area while Alvis Brothers contractors are doing the same for farmers in North Somerset.

John also realises that it is one thing delivering feed to Sedgemoor Market but it is quite another getting the donations to the farms were the fodder and bedding is needed in sufficient quantities to make a difference. Further this support will need to continue for many weeks to come and John has therefore been delivering the donated goods on a daily basis to where it is actually required.

He emphasised to me that small donations, little and often is what will be needed in the coming weeks because there is nowhere to store hay and straw under cover in large quantities while the wrapping of many of the silage bales has been punctured during transportation and so they will not last for long.

Therefore John stressed the need to deal with donations in a practical manner so as to put them to good effect and he is very happy to be contacted by anyone interested in making a donation on 01761 221234 or 07887755949.

Similarly the Bath and West has set up a “Somerset Farmer’s Fund” for the feeding and welfare of animals and the longer term regeneration of land to grazing pasture. This fund will be co-managed with the NFU and Royal Agricultural Benevolent Institution to direct help to farming businesses to assist their recovery and if anyone feels able to make a donation please visit http://www.justgiving.com/Somerset-Farmers-Fund.

James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk

Floods, Floods and More Floods

Earlier this week I was speaking to a colleague who had just returned from a holiday in Sri Lanka and she remarked that the only news she had seen about the UK while she was away was a CNN report concerning the flooding on the Somerset Levels. I think this highlights the severity of the situation which is facing farmers and householders on the Somerset Levels.

Certainly the Media have embraced the situation which has attracted the attention of government ministers, the Prime Minister and last week even the Prince of Wales, all of whom have acknowledged the plight of those whose livelihoods and homes are being threatened by rising flood waters.

Back in early January I wrote about the flooding, explaining that winter flooding is not in general as damaging to agriculture as the summer floods we saw in 2012, but I have to say I was not expecting the situation to continue getting worse over the ensuing four weeks.

At the time of writing this article, householders and livestock are being evacuated from villages such as Moorland as the water levels continue to rise. There are properties being flooded which have not flooded in living memory, while James Winslade, a farmer from Moorland has had to transport more than 500 of his cattle to Sedgemoor Market which has opened its doors to act as a collection centre for evacuated stock from where other farmers can pick them up to re-home them.

Sedgmoor Market auctioneer, Robert Venner said the support from local farmers and businesses has been “absolutely staggering”. But Ian Johnson, NFU spokesman in the South West, said the flooding and misery caused to farmers and homeowners was “completely avoidable.”

Country Land and Business Association (CLA) South West Director, John Mortimer, said that everyone involved, including the Secretary of State and the Prime Minister, now agreed that dredging was essential as a rapid solution.

“Work should start as soon as practically possible but it may well need to continue for some years until the whole system – including those sections managed by the Internal Drainage Boards - has yielded up its stored silts and deposits,” he said.

He went on to comment, “The initial work should be paid for by Central Government but we will then have to deliver a full and detailed appraisal of what it will cost to maintain and manage the system once it has been restored to design capacity.”

However, with more storms forecast, it seems inevitable that things are going to get worse before they get better but perhaps the one good thing that has come out of all this misery is the acceptance, at the very highest level, that extra money will need to be provided by government to dredge the main water courses even if the ongoing responsibility will then revert to farmers and landowners in the locality.

James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk

Moving Businesses Forward into the Digital Age

Last week saw the opening of the Rural Payments Agency’s (RPA’s) online facility for applying to the 2014 Single Payment Scheme (SPS). In an attempt to encourage many more farmers to apply online as opposed to submitting paper forms, more than 40,000 farmers, landowners and agents across England should already have received postcards, promoting “SPS Online”.

Having used the system myself I can certainly vouch for its simplicity and it helps prevent applicants making silly mistakes but perhaps the most useful aspect is the fact that one can be certain the form has been successfully submitted which was not always the case when relying on the postal system. However, one must not be hoodwinked by the “simplicity” because the form still needs to be checked to ensure the correct fields are shown and to deal with any necessary amendments.

The RPA Operations Director, Paul Caldwell said: “The RPA is one of the leading agencies in delivering online facilities, and has worked hard to provide a number of schemes including the highly praised SPS Online. The first wave of contact (the postcard) is part of the Agency’s ongoing drive to help farmers, landowners and agents move their businesses forward into the digital age.”

As a consequence of this drive, local drop-in centres are no longer available to help farmers with any queries that they might have about their entitlements or the application process, so former users will be among those who will get offers of help from the RPA.

To use SPS Online for the first time, claimants must first register on the Government Gateway’s website; www.gateway.gov.uk . However a word of warning is being expressed because some farmers are receiving a bogus email from gateway.confirmation@gateway.gov.uk informing them that the RPA has not been able to process their claim. The email also has an attachment that contains a virus and so the RPA’s advice is to not respond to the email and to delete it immediately.

This sort of scam highlights some of the dangers of the digital age that the Government and its Agencies are keen for us to embrace and will serve to make those who are already nervous about submitting such important information online, even more so.

A certain amount of caution is always needed when using any system online but with care, even an “digital luddite” like me can see the advantages will certainly outweigh the disadvantages.

If any farmers would like to know more about applying for and submitting their Single Payment Scheme applications online they can contact Carter Jonas’ Rural Team on 01749 683381.

James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk

Acronym-Mystic

A former non-executive director of Manchester United FC has just completed a thought-provoking series of four programmes for BBC Radio 4 and also the round of media interviews it seems is incumbent upon any ‘celebrity’ personality presenter.

The series was entitled ‘MINT: The next economic giants’. While music hipsters of the early part of this century might recall a programme on BBC 6 Music called ‘Mint’ – the credentials of the Radio 4 programme presenter could not be more different than those of DJ host Marc Riley, although both hail from Manchester.

As well as an ex-non-exec of a football club, presenter Jim O’Neill is a former chairman of Goldman Sachs Asset Management and very much the moment’s ‘go-to’ economist who says he sees his discipline as a social science.

MINT is an acronym which stands for Mexico, Indonesia, Nigeria and Turkey. These are the economies Jim O’Neill identifies as the next set of developing and emerging economies to which the global investment community is looking now to reap benefits in the future.

MINT is the new BRIC (Brazil, Russia, India, China) for long term investment bets, according to Jim O’Neil. While denying in an interview that he was the originator of the term BRIC, O’ Neill appeared happy to be credited with popularising its usage three years.

So popular in fact that anybody with even a passing interest in international business and investment can identify the BRICs. The very popularity is the spur which is moving the focus of global investors on to the MINTs.

In one of the radio interviews, O’Neill confessed that his focus might have been MIST and not MINT as South Korea was in the running too. Whether MINT or MIST, two of many reasons for identifying such countries were demographics and young governments with emerging democratic mandates. In the case of Mexico, a very young government with an administration led by President Enrique Peña Nieto who is just 47 years old.

Demography is on the side of developing and emerging economies in a way it isn’t for those more established. Investments always have to look to the future and there’s nothing more encouraging for a country’s future than a demographic bulge of young people poised to aspire, produce and consume.

A young population is advantageous for growth. Older societies, where pensioners increasingly outnumber the young and need to be supported by that dwindling number of young, prove burdensome to economic growth.

From an economist’s point of view, an active policy of immigration is something to look to when demographics are against growth. But the fly in the ointment for countries facing this demographic conundrum is, as Jim O’Neill pointed out, the fact that they live by the political cycle.

While the investment community thinks globally and acts for the long term, politicians think as far as their democratic tenure permits and, in the main, are guided by the populist policies of their times.

Jim O’Neill is nearly 57 years old but he talks with a speech inflection common among young people and which has been identified as ‘uptalk’. Apparently, uptalk is not appreciated by (older) senior managers as it indicates a reluctance to commit to what one has just said and infers a question and, thereby, uncertainty in the speaker.

Jim O’Neill sounded certain. Demographics are against the senior managers.

Will Mooney MRICS
Partner
Commercial, Cambridge

EU changes it's renewable energy targets

Last week the EU announced that it was going to change its renewable energy targets although at the time of writing the significance of this is as yet unclear.

 

At present the target is to cut emissions measured against those produced in 1990 by 20 % by 2020 and for 20% of energy consumption to come from renewable sources by that date. This policy has certainly had a major impact on the British countryside with wind turbines and solar PV “farms” springing up all over the place.

 

These projects have been driven by subsidies and it these subsidies which have been blamed by major electricity supply companies for pushing up our energy prices and this subject has clearly become a “hot political potato”.

 

But, if we believe climate change is important, there is little doubt that significant financial incentives will be required over a long period to encourage the huge investment which is required to shift our energy supply chain away from fossil fuel based technologies to low or zero greenhouse gas emitting sources of energy.

 

It is believed the EU’s change in policy will still involve setting targets on the reduction in greenhouse gas emissions but countries will be given freedom on how to achieve these targets. This will cause concern in some quarters because the viability of many renewable energy projects is dependent upon the receipt of subsidies and provided there is confidence that the subsidies will continue then so too will investment.

 

It is believed the new target will be a 40% reduction in 1990 greenhouse gas emissions by 2030 but each country can choose how to achieve this, whether that be through investing in renewables, nuclear or perhaps by burning gas rather than coal for instance. As you can see this could result in a shift in emphasis away from renewable energy technologies if the government so wishes. This could have a effect farmers and landowners, many of whom have looked at renewable energy projects as a significant additional source of income.

 

It is too early to tell what impact if any the recent EU announcement will have on our domestic energy policy but a lack of certainty going forward is a concern highlighted by Jonathan Scurlock, NFU chief advisor on renewable energy and climate change. He said, “The failure to send a clear message to the renewable energy supply chain makes some investors nervous.” He went on to comment that the government showed a “lack of enthusiasm” for renewables while showing encouragement of fracking.

 

Clearly fracking is yet another whole subject which could have an impact on our countryside on which we do not have space to comment here but on which there will no doubt be many more column inches written in the coming years.

 

Carter Jonas’ energy team can provide advice and comment on any Renewable Energy proposals and for any queries in the South West please contact Thomas Ireland in their Wells office on 01749 683386.  

James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk

Property Investors Return With Confidence

The year has been heralded as one in which investor confidence in property will return in earnest. Rural property peers have pointed to the ‘froth’ skimming off premium agricultural land values this year as property-minded investors return with more confidence to the more obvious residential and commercial sectors for the first time post-credit crunch.

But, in the commercial sector, it’s by no means the wholesale return of investor confidence in any commercial property opportunity and the smartest money is always ahead of the game in the smartest of locations.

Last summer, Cambridge greeted the news that Tesco Pension fund is backing developer Brookgate’s 65,000 sq ft Grade A building which is at the heart of the cb1 scheme. But this five storey building was already pre-let and pre-let in Cambridge is always going to be a sure-bet.

In places like Cambridge, where there are limited opportunities in a smattering of its remaining key strategic locations, funders have been prepared to invest on very specific terms for the past three years. The terms usually involve pre-let agreements, more often than not with blue-chip companies and with certainty of long term leases.

Given the limited and ever diminishing supply of commercial sites with viable opportunities in Cambridge, those which exist are big ticket items and so it’s the cream of the funders who are attracted here.

With forecasts that the development pipeline will be reduced by more than 25 per cent by the end of this year, there’s concern about future opportunities for commercial property investments.

Investors like to look ahead and stay ahead but it’s getting more and more difficult to point to the next tranche of Cambridge sites looking for funding. Land which is supposed to see the city through to 2030 is already coming in to the calculations and commercial allocation.

With so much current building activity in Cambridge, it’s difficult to convince a lay audience that there’s a paucity of sites in supply on the near horizon but it’s one we will have to face – and soon.

The year 2014 is going to be a big one for those with development and property interests here.

This year sees Cambridge City Council and South Cambridgeshire District Council’s Local Plans firming up with the identification of residential and commercial site allocations to take the area through the next couple of decades.

At the end of this month and in the early days of February, we welcome in the Chinese Year of the Horse. People born in years of the horse are believed to be active and energetic and, work wise, they refuse to give in to failure but, add the astrologers, ‘their endeavour cannot last indefinitely’.

In a twelve year zodiac cycle, the next year of the horse in 2026 - property investment funds are already backing Cambridge sites that are four years in front of that horse.

Will Mooney MRICS
Partner
Commercial, Cambridge