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Podcast – focus on regenerative farming

In episode one of our latest Business Noodles and Doodles series, Adam Henson and Duncan Andrews discuss the evolution of Cotswold Farm Park from its founding and original focus on rare breed preservation into tourism and accommodation.

They spend quite some time talking about environmental concerns. Acknowledging that the NFU’s net carbon zero target of 2040 isn’t going to be easy, they believe that it is crucial to be part of the regenerative farming movement (loving your soil, producing high quality food, but less of it).

This ties into comments from a previous podcast by Lord Charles Courtenay, the Earl of Devon who runs the Powderham Estate near Exeter and worked with the NFU on the Environment Bill in 2021, including conservation covenants and biodiversity net gain:

This idea of the land providing ecosystem services, providing access, providing wellbeing, providing good local food, and managing the land in a way that is sustainable in the long-term are all actually things that somewhere like Powderham and many traditional estates have always done because you’ve always managed the land for the long-term health of the estate. If you’re looking at land ownership as a long-term interest, if your business plan has a 100-year reach or a 100-year forethought, then you’re going to be managing your land in a sustainable way.

Lord Devon also takes aims at some of the larger proposals often discussed:

One of my biggest bugbears is around this sort of rewilding and the grand schemes that you see trumpeted, because they’re not applicable to your traditional medium-sized farm. What we need to be looking at is to ensure that farmers of all sizes just do a little bit better. A 5% improvement in your ecosystem services, in your biodiversity, in your retention of water etc, across the whole country is vastly more important than one great … rewilding project. I think if everybody can do a little bit better, we’ll make a much bigger difference.

Adam did however want to be positive about the general approach from Britain as being on the front foot on farming sustainability with a lot of work going on in the wider industry, in the dairy world, in the beef world, through genetics, through feed conversion, diets, all those sorts of things to try and reduce methane from cattle too. He believes that the UK are 60% better when it comes to climate damage or positive climate contribution than other developed countries.

He also talks about ways of reducing our carbon footprint (“using various forms of organic manure to reduce fertiliser input, adding legumes to all of grassland swards to cut out the use of fertiliser completely, precision farming, making sure we’re putting the right stuff in the right place at the right time and really trying to limit any wastage whatsoever.”)

Lord Devon mentioned the work of Professor Dasgupta, who’s a Cambridge economist into the economics of biodiversity.

He makes clear that we, for centuries now, have consumed natural capital at no cost….and the enormous damage that we, as a society, have done around the world has never been priced into what we’re consuming, and it still isn’t. The longer … we do that and don’t really account for the price of what we’re doing and the price of what we’re consuming, the longer we’ll continue to eat this planet.

Mechanisms are being established and bit by bit, companies and particularly individuals are beginning to look at their carbon footprint. What is their consumption rate of the planet? Decisions are being made accordingly, but we need transparent ways in which to express that. The real challenge, at the moment, is there’s no agreed methodology, so we’ll look to the accountants, please, to tell us how to do that.

It will be interesting to see how this challenge about measurement evolves and this is discussed in a future podcast that covers B Corp status – subscribe to the podcast to be kept informed about this and all other future episodes.

From my experience environmental issues and considerations, such as those mentioned by both Adam and Lord Devon, are coming to the fore in many conversations with our farming and landowning clients.

Common questions being what they should or could be doing to ensure that they are best positioned to benefit from these schemes, in many cases to secure the long-term position of the farm with falling direct subsidies.

One of the fundamental considerations is the tax implications of adopting some of the schemes being introduced. In particular, the potentially unforeseen inheritance tax implications if the new land use is no longer eligible for Agricultural Property Relief (APR).

With that in mind, possibly the biggest thing to come out of the recent Spring Budget for the landowning community is the announcement of a consultation and call for evidence on the taxation of environmental land management and eco system service markets.

I have long expressed my concerns and frustrations as to the difficulty in advising clients, with any certainty of the tax implications, of putting swathes of their land into Countryside Stewardship, Landscape Recovery or other similar schemes particularly in relation to the ability for the land to qualify for APR and the knock-on effect on associated buildings and farmhouses.

The same principles arising in relation to biodiversity net gains projects which become a legal requirement from 1 November 2023, while the need for nutrient neutrality measures to offset the phosphate and nitrogen impacts of developments is already causing major issues in some areas such that time is pressing on.

Hopefully, this consultation will clarify the position and we will once again be able to advise with certainty but with the consultation running until 9 June it may well still be quite a while before we get the clarity we are seeking.

One hopes that common sense will prevail and that those entering their land into projects for a general environmental benefit will not be disadvantaged from a tax perspective, but we shall have to wait and see.

Listen to the full podcast episodes:

Adam Henson and Duncan Andrews – Cotswold Farm Park

Charles Courtenay, Earl of Devon – Powderham Estate

FEATURING: Brian Harvey
As head of PKF Francis Clark’s agricultural sector group, Brian manages a dedicated team of agricultural accountants and tax advisers. He hails from a Cornish… read more
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