Woodland could become a source of income

The Woodland Carbon Code (WCC), which is a Government scheme aimed at verifying the amount of CO2 captured by new planting, is offering landowners tax-free income as well as more traditional forestry revenues.

According to the WCC, a scheme which captures 30,000 tonnes of CO2 across 100-hectare (247 acre) for over 95 years could bring in between £152,000 and £304,000 in carbon revenue, depending on carbon value at the time. This is currently between £5 and £10 per tonne.

The scheme has been designed to address the UK’s international environmental obligations, as woodland ‘consumes’ CO2, which is harmful to the environment. It works by allowing the owners of woodland to trade ‘credits’ with businesses engaged in industries that produce atmospheric emissions.

Landowners go via local organisers, who estimate how much carbon will be captured during the lifetime of a project. Once this information has been validated, the amount is issued as pending issuance units (PIU). The verified PIUs are then converted to woodland carbon units and used to offset carbon footprints.

Woodland owners can either sell their PIUs upfront and remain tied to delivering target totals over the duration of a scheme, which could be up to 100 years, or sell approved woodland carbon units once verified.

As one registered valuer commented, not only is this a practical and effective way of reducing carbon in the atmosphere but WCC can significantly affect the returns from forestry.

Mike Bagg, Partner at Milsted Langdon, said: “Any measures to further reduce our carbon footprint have to be welcomed in this day and age. This one, particularly, with its tax-free benefits for landowners, is good news for the agricultural sector as a whole.”

For more information about how Milsted Langdon can help, please contact us.

UK farmers could be at risk from trade deals

A new report has found that the UK’s food system could be put at risk if trade deals post-Brexit result in lower food prices, as well as lower food and farming standards.

The report, which was published by the Green Alliance in association with the Food and Nature Task Force, states that if the Government is unable to reach a deal with the EU and opens the UK to foreign imports, not only will there be a glut of non-EU food imports, there could be lower standards for food and agriculture too.

According to the report, if this happens, non-EU imports of chicken could multiply by 17 times its current level, butter by 26 times and cheese by five times. It has also suggested that food imported into the EU is four times more likely to exceed legal limits for pesticide residues than food produced domestically.

At the moment, the UK imports around half its food and 70 per cent of this comes from EU countries, where it is largely produced to the same environmental and welfare standards as are present in the UK.

However, if the Government fails to reach a good trade deal with the EU and instead unilaterally opens the UK to agricultural imports, food imports from outside the EU are likely to rise dramatically.

As well as the feared lowering of standards, the report claims it would mean a bigger environmental footprint for UK food. For example, beef is more than twice as expensive to produce in the UK as in Brazil, but the environmental effect of Brazilian beef is nearly three times higher, mainly due to deforestation. Therefore, importing more beef from Brazil would increase the environmental footprint of UK food.

Michael Bagg, Partner at Milsted Langdon, said: “Farmers and agricultural businesses face a number of uncertainties and potential challenges in the years ahead. It is important for them to keep a close eye on what is happening with Brexit negotiations to ensure they are well-placed to react to any agreed changes.”

For more information about how Milsted Langdon can help, please contact us

Productivity improving on UK farms

Recent figures from the Department for Environment, Food and Rural Affairs (Defra) suggests that productivity on UK farms improved significantly last year on 2016 levels.

The figures, in the report Total factor productivity of the UK agriculture industry, show that productivity was up by 2.9 per cent and it was mainly driven by an increase in overall levels of production.

Total factor productivity is a measure of how well inputs are converted into outputs. Moreover, it gives an indication of the efficiency and competitiveness of the industry and is a key indicator of the long-term performance of the agricultural industry.

According to Defra’s report, the volume of all outputs increased by 3.6 per cent on 2016, mainly driven by a 7.3 per cent increase for all crops. The rise was also boosted by a 0.5 per cent increase for livestock meat outputs and a four per cent increase for livestock product outputs. In comparison, the volume of all inputs only increased by 0.7 per cent.

However, the Agriculture and Horticulture Development Board (AHDB) has suggested that, while farmers in the UK are amongst the best in the world, productivity is lagging behind major competitors.

As part of its latest study, the organisation claims that the USA and Netherlands are outperforming the UK on agricultural productivity by as much as three times, and the organisation has called on farmers and the Government to work together to close this gap.

As a spokesman for the AHDB commented, low productivity growth reduces the UK agricultural industry’s long-term ability to compete, grow new markets and improve its natural capital.

Mike Bagg, Partner at Milsted Langdon, said: “In recent years diversification has had a significant impact on the agricultural sector’s growth. The entrepreneurial spirit of farmers never ceases to amaze me and today’s figures prove that. However, I believe there are still many more commercial opportunities to unlock and that is something Milsted Langdon helps farmers with every day.”

Calls to eradicate ‘not-spots’

A group of 56 MPs from a number of different parties have called on the Government to improve rural connectivity and ensure that rural areas can be connected via 4G. It is estimated that, if 4G is this does happen, the UK’s Gross Domestic Product (GDP) could benefit from an extra £75 billion.

In a letter to Digital Secretary Matthew Hancock, the MPs have asked him to challenge the current speed and ambition of 4G coverage rollout in rural areas. They are also calling for a legally binding coverage obligation to be imposed on all four major network operators to support the Department for Digital, Media, Culture and Sport’s ambition to deliver mobile coverage to 95 per cent of UK geographic landmass by the end of 2022.

Furthermore, the group is making a suggestion that Mr Hancock looks at implementing significant changes to the rules on transparency so that mobile operators can no longer hide behind ‘commercial confidentiality’, refusing to tell communities where and when they plan to roll out coverage.

According to Ofcom’s most recent Connected Nations report, around 90 per cent of UK premises can currently make calls on all four major mobile networks – EE, O2, Vodafone and Three. However, this falls to 57 per cent in rural areas. The regulator had previously imposed a coverage target of 90 per cent on all mobile operators by 2017 but this has been missed.

Ofcom has said it will include a new coverage target as a condition on the sale of its recent spectrum auction. Operators acquiring the licences carrying these obligations must provide good coverage across at least 92 per cent of the total UK landmass.

However, the MPs said they were concerned that these conditions might “fall significantly short” of the 95 per cent ambition. They wrote that Ofcom’s statutory obligations must clarify that its main purpose is to work towards the delivery of universal mobile coverage.

Mike Bagg, Partner at Milsted Langdon, said: “Rural businesses have been fighting an uphill connectivity battle for years. Worse yet, the internet is becoming increasingly important for businesses, especially as potential customers switch their spending habits from offline to online. Traders working in ‘not-spots’ could look into alternative forms of connectivity for now, such as satellite, at least until better coverage has been rolled out.”

BPS online

More and more farmers are switching to making Basic Payment Scheme (BPS) applications online, and more than 88 per cent of the 2018 BPS applications so far have been received this way.

The Rural Payments Agency (RPA) has said that more than 35,000 BPS applications have been submitted since the opening date of 13 March, and with the deadline of midnight on 15 May looming, farmers have been warned that completing the application will take longer than it did last year.

According to the RPA, the process has been especially challenging for some applicants due to the new hedges layer tool, which has been criticised for having major errors in the mapping data.

However, Minister of State for Agriculture, Fisheries and Food, George Eustice, has said that online applicants are more likely to find checking and updating details, and viewing and transferring land, easier than paper applicants.

Furthermore, farmers applying through the Government portal have the advantage of being able to use the system’s built-in checks to ensure that their application is accurate. They will also be able to check and transfer their entitlements online, as well as view maps and aerial photography of their land, and they can print maps of individual land parcels, and transfer and remove land parcels online.

Mr Eustice is urging farmers who have yet to submit their applications to do so now, so that they can be certain that the RPA will receive their application ahead of the deadline.

Those submitting applications should be aware that if an application is received after 15 May, it may be treated as being late and a penalty could apply. If the supporting evidence is received after midnight on 11 June, the application may be rejected entirely.

Michael Bagg, Partner at Milsted Langdon, said: “It is important that farmers and agricultural business owners keep on top of these deadlines, to ensure that easily-avoidable penalties are not incurred. As accountants and tax advisers to the farming community, Milsted Langdon are able to help any farming client with their application, if required.”

For more information about how Milsted Langdon can help, please contact us.