Fisher German Rural Newsletter May 2015

Fisher German Rural Newsletter May 2015


Welcome to our Post-Election Rural Newsletter

With the Election now behind us and Cameron in Downing Street looking ahead with a new Government to a further five year term, our Consultant Harry Cottrell gives us his view on the events of last week and how the Conservatives may look to deliver their Manifesto promises.  Few predicted a Majority win, but with the majority now in place the Conservatives will get straight down to business.  Crucially this means a European Referendum, the result of which will be of great significance to UK agriculture.  

Following the Election, there has been an immediate strengthening of the Pound and the UK Gilt market, reflecting global confidence in the UK economy, with this backdrop and with interest rates still at an historically low level, Struan McDougall will be talking about whether this is a good time to consider your financial arrangements.

We hope that you find this publication of interest. If you need further information, or would like to know more about our rural services, please contact one of our rural team.



The Election - what the results mean for you

 

Against all the odds, and most predictions, the Conservatives have won their first majority since 1992.

 

What are the key issues for farming and the rural economy and who are the personalities that matter?

 

Europe and the in/out referendum will dominate the agenda, and its importance to the rural sector cannot be overstated. DEFRA ministers commonly feel that their Ministry is little more than the delivery arm of the EU, as 80% of the workload and funding originate in Brussels. In the run up to the election, very little had been done to consider what would happen in the event of an 'Out' vote and one assumes that this will be a priority for civil servants.

 

The CAP is not popular with the electorate, UKIP’s pledge to abolish it was largely ignored by the other parties during the election campaign and it may be that the CAP becomes a key example of EU waste, profligacy and maladministration for the Out Campaign. One very concerning aspect of the renegotiation is the proposal to restrict freedom of movement. Farming and the food industry are reliant on European labour and little thought has been given to how it would be replaced.

 

In general the focus on economic growth, the cornerstone of the Tory campaign, will be the main priority for DEFRA. They have proposed a 25 year plan for British food production and a reduction in red tape, an increase in apprenticeships and a science led approach to GM crops. This means that farming will become more dependent on the market and subsidy will be focused on the environment.

 

DEFRA team 

 

The DEFRA team has undergone some minor changes. Liz Truss remains at the helm, a Norfolk MP who admits to being prepared to vote to leave the EU if the renegotiation fails to deliver, is a champion of British food who will have the RPA IT fiasco at the top of her agenda.  George Eustice, a Cornish MP and former UKIP candidate with a farming background, is promoted to Minister of State, whilst Rory Stewart, a cerebral Cumbrian MP who chaired the Defence Select Committee, is the new Under Secretary.

 

Throughout the coalition Government, the Secretary of State at the Energy Department came from the LibDems and this maintained the Government commitment to renewables. The Tory manifesto was clear about removing support for onshore wind and there was little mention of other technologies. The new incumbent is Amber Rudd, a newcomer to cabinet, and we must wait for her first pronouncements, but the direction of travel for UK energy policy seems headed towards nuclear and fracking rather than renewable technologies.

    

Planning changes

 

The election campaign was heavy on promises on house building and a Tory victory will mean that, in addition to ambitious proposals for new homes, there will be new towns. The Coalition’s planning reforms, the National Planning Policy Framework, with its emphasis on local plans, will be hard pressed to deliver, particularly in the face of local opposition. Eric Pickles has departed Communities and Local Government, to be replaced by Greg Clark, who, as the architect of the NPPF, has impeccable planning credentials.

 

In general, property owners and businesses can be reasonably content with the election result.  Labour’s punitive proposals on tax and property are firmly in the long grass for now and they will, in all likelihood, reposition to try and win the middle ground. Rest assured, for the new Government, the dust will settle, the Tory euphoria will subside and it will be business as usual when the first crisis hits.


Click here to read more about our rural consultancy services.



Time to update your finances?

 

With the farming industry experiencing poor commodity prices and relatively high input costs, the pressure on cash flow is now greater than ever before. This has pushed many farmers to consider the working capital requirements of their business for the forthcoming years. Maintaining cash flow is critical to growing the business. 

To facilitate the ever increasing capital demands, for some time farmers have been borrowing against high farmland values, but experience shows that many bank loans now have a certain margin for only the first few years of the loan period. Others, have sought an extension to their working overdraft facility, but are subject to unpredictable banking policy changes, lending review fees and annual negotiations with the bank manager which are dependent on the strength of the recent set of farm accounts. 

For those seeking a capital injection or looking to refinance existing borrowing, the option of an AMC Fixed Rate Loan is one that must be considered. With rates more attractive than ever, AMC fixed rate loans are proving to be a ‘hot topic’. The AMC have announced that chargeable rates are now in the region of 4 – 5%. 

So what does this mean? For a 20 year fixed annuity loan, the rate on 8 May 2015 was 4.45%. Repayment would now cost less than &38,000 per year for a loan of &500,000, or put another way represent an annual finance charge of &126/acre on 300 acres, or &76/acre on a 500 acre unit. The AMC judge each application on its merits, with ‘high quality’ applications attracting lower rates. 

Whether a traditional family farm or a large agribusiness with eye watering equity in land value, high land values and competitive rates offered by an AMC Fixed Rate Loan, neatly complement one another.  

This presents an exciting opportunity to refinance existing borrowing, build a working capital base, and provide strength in liquidity or the ability to seize upcoming business opportunities. The future of rates in the next 12, 24 or 36 months is unknown and it is up to the individual farming business to assess their options for the forthcoming years. 

The AMC maintain their motto, ‘lend and leave’, unlike many high street banks. As AMC Agents, Fisher German are able to assist in reviewing the finance options and securing a Fixed Rate Loan.

For further information, contact Struan McDougall on 01777 860755 or email him here

 



On the Market

 


 

 Honiley Hall, Kenilworth, Warwickshire

An important and beautifully maintained country manor house in a very private setting with fine views and exceptional grounds of 34 acres.

POA


 

 

South Street, Caulcott, Bicester, Oxfordshire

A superb block of productive arable land in an easily accessible location. For sale as a whole or in three lots. 434.24 acres.

Guide price &3,500,000


 

 

Key Green, Congleton, Cheshire

An exceptional equestrian facility with handsome stone farmhouse and 11.32 acres of land.

Guide price &1,250,000


 

 

Wood Farm Court, Thrumpton, Nottingham, Nottinghamshire

Mixed commercial and amenity woodland. 77.88 acres

Offers in the region of &300,000


 

To view all available properties, click here




Events 2015

 

May

16 Bedfordshire YFC Rally

16            Herefordshire YFC Show

17 South Oxfordshire Hunt Dressage and Open Horse Show

23            Worcestershire YFC Show

23            Gloucestershire YFC Show

27 - 28 Staffordshire County Show


June

4              CLA AGM Sponsorship (Eckington)

5              GWCT Simulated Game Day, Ilmington

10 - 11 Cereals 2015

20 Sandbeck Estate Charity Clay Shoot

23 - 24 Cheshire Show

24 Lincolnshire Show


July

4              Hanbury Show

11            Upton Triathlon

12            Ashby Show

29 Nantwich Show


August

1 Blakesley Show

2              Herefordshire County Fair

6 - 7 Thame Summer Sheep Fair

20 Flint and Denbigh Show

27 Bucks County Show


September

13 North Notts Ploughing Match

19 Collingham Show 

24 Flintham Show

26  Southwell Show

30 Cheshire Ploughing Match


October


November

25 - 26  Midlands Machinery Show