Update on carbon and BNG opportunities for UK farmers

In this issue, farm consultancy expert Mark Russell, a partner at Carter Jonas, provides advice for farming businesses on carbon, BNG and land market drivers. When it comes to carbon, inset and o set markets are becoming established so it’s time to make sure you have a baseline done.

Biodiversity Net Gain (BNG) continues to create a lot of noise. The options open to you as farmers and how you relate to this part of the market are becoming clear –especially how to balance risk and reward.

The market requirement for o set land is not yet clear but estimates range around 6,000 BNG units per year, translating into around 4,000 acres/year. Whilst this is a lot of land, when you spread it over 322 local planning authorities (LPAs), that is 12.5 acres of requirement in each LPA each year. With the requirement being every year, over the 30-year policy period that equates to circa 375 acres in each LPA area. Therefore, with habitat banks averaging around 100 acres, there is space for 3–4 in each LPA over that 30-year period. If you want to take advantage of this market, acting early is essential.

While that may sound negative, I am in fact very positive about how this can deliver a pro table farm business income stream, with BNG providing the springboard to talk about carbon, agroforestry, paludiculture, bene ts of public access, ESG investment by corporates, water resources management and a myriad of other natural capital elements that may be monetised in the future. Water is going to be a massive part of this and may be the next ‘nutrient neutrality’ issue to hit us.

The advantage for the carbon/ road to net zero world is that rather than being niche, it has mass market, landscape potential. It also falls into the category of ‘doing the right thing’, which can have real world bene ts such as lowering borrowing rates. Understanding your own potential route to net zero is a key part of this decision process.

One of my concerns over the last 20 years has been the lack of joined up research across agricultural land. The development of natural capital services provides the chance to really change this with farm clusters and perhaps buying groups being potential vehicles to link farmers with universities and organisations in the research space. Control over your data will be important here and picking the right partner key.

When it comes to land market drivers, we are continuing to see upwards pressure on commercial land values, with limited supply and a number of buyers – especially for larger blocks of land. Recent deals in East Anglia re ect vacant possession values of between £10–11,000 per acre (grade 2, arable, non-irrigable). Natural capital buyers are bringing new money to the market and some of them can pay a multiple of agricultural land value where they have speci c developer requirements. So, similarly to the development world where we are used to doing ‘subject to planning deals’ there are now ‘subject to BNG requirement’ deals being agreed. Values range greatly and there is a whole new language within these sale agreements that we can help you to get right.

For further information contact Mark Russell MRICS on 07967 555737 or mark.russell@carterjonas.co.uk FG