Category: BUSINESS

Mark Wrinch

Associate solicitor, Birkett Long

Sea wall maintenance is often left to landowners but can be a minefield of red tape. Navigating the legal issues is essential, however, before starting any work – no matter how urgent.

Farmers and landowners have no obligations in relation to the sea wall generally, but the Environment Agency (EA) is not obliged to maintain these walls either. It simply has the authority to carry out works, when funding allows.

It therefore falls to the farmer to maintain the wall or lose vast swathes of land, and potentially expose residential or commercial properties to flooding and walkers to danger.

As a result, landowners can and do face costly enforcement action, even prosecution, for failing to use the right materials to mend sea walls, particularly if acreage falls into environmentally sensitive areas.

In order to carry out works to protect land, the farmer must apply for an exemption permission from the EA. There is no specific exemption related to sea walls; instead there are 93 possible exemptions covering all manner of works such as waste disposal.

These are all on the EA website but to navigate through and find the ones you need, it is best to contact the EA and ask them to help work out what is needed. Each licence costs £1,600 upwards.

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Many coastal areas however cover Environmentally Sensitive Areas (ESA), Sites of Special Scientific Interest (SSSI), Areas of Outstanding Natural Beauty (AONB) and other such environmental and wildlife designations, which require bespoke exemptions from the EA.

These tend to cost considerably more – the sum being dependent on what is needed – and Natural England and other wildlife groups will also need consulting.

GET LICENCES IN PLACE BEFORE CARRYING OUT WORK

Getting the necessary permissions from the EA, particularly bespoke licences, can be protracted and take several months, so consult with them early and take professional advice.

The EA is in the process of devel oping an exemption for small-scale works that should hopefully help with cutting through the red tape, but this is not ready yet. There are, however, a few local groups being set up to help farmers navigate the current process.

Do not under any circumstance undertake works without the necessary permissions, as you could face environmental enforcement, possibly even prosecution and fines or even prison sentences in the worst scenarios.

Be aware that exemption permissions are licensed to individuals, not properties, so if a coastal farm is changing hands, the new occupier will have to apply for their own licence. On tenanted land, whoever carries out the sea wall maintenance – landlord or tenant – must hold the licence.

CHECK CONTRACTORS AND MATERIALS

The EA employs environmental engineers who should be able to advise on the type of work and materials that are needed. Always get this advice before planning work.

If the work requires contractors and suppliers, ask the EA to check they have the necessary permissions, such as for waste disposal, and have a clean track record. Local word of mouth should be a good indication, too.

RICHARD WRINCH, SUFFOLK

⁕ Suffolk farmer Richard Wrinch has had to part with £27,000 in the past three years for repairs to his one-and-a-half-mile stretch of sea wall.

“We had been told by the Environment Agency before the tidal surge of December 2013 that it had withdrawn maintenance of our wall and repairs were up to us,” said Mr Wrinch.

“The wall didn’t disappear but it was overtopped and after five weeks of waiting for the water to vanish we realised it had taken 90% of the clay shoring it up.”

It cost the Wrinch family £17,000 to hire experts and buy the heavy plant to reclaim the clay following the tidal surge. In the autumn of 2015 they had to make another repair to a 40m stretch of wall at a cost of £10,000.

If they had done nothing, the sea would eventually have reclaimed about 112 acres of their land.

“Managed retreat might be our only way in the future because maintaining all 1.5 miles in the long term is not viable,” said Mr Wrinch.

The family received support from the Essex Coast Organisation (ECO), set up by farmers to examine and challenge the withdrawal of sea-wall maintenance by the EA.

ECO has developed a good working relationship with the regional EA representative and the agency’s Anglian Regional Flood and Coastal Committee has now committed an annual £19,500 to provide materials, labour and plant costs for small-scale maintenance works.

Andrew St Joseph, farmer and head of ECO, said: “By intervening early, repairs stay small, allowing the EA to focus its reduced resources on more complex repairs.

“Years ago it would take two months and a written application to acquire permission. Now, with increasing trust between us and the local EA representative, it requires just a telephone call for small-scale works.”

Anglia Farmers sees turnover slip

⁕ Lower commodity prices pushed turnover down at Anglia Farmers, the UK’s largest farmer buying group.

The year to January 31, 2016 saw group turnover drop £16.5m to £230.9m but a 10% higher operating surplus of £882,000 was achieved.

The group’s accounts include results for purchasing co-operative Anglia Farmers with three wholly owned subsidiaries AF Affinity, AF Finance and AF Biomass.

After a distribution of almost £537,000 to members, a net surplus of £323,000 has been retained, increasing the balance sheet to £2.8m. The group also runs a £5m peer-to-peer lending scheme.

Pig price on slow road to recovery

⁕ Pig producers face a long road back to profitability as the market finally starts to move up.

The EU-spec standard pig price rose to 117.49p/kg in the week to 28 May, reflecting a rise of more than 5p/kg in eight weeks.

The average British producer lost £9 a head in the first quarter of this year, compared with a £4 loss in the last part of 2015, according to AHDB Pork.

This was the fifth consecutive quarter in which the gap between pig prices and full production costs was negative.

It is estimated that about 20,000 sows have been lost from the national herd in the past few months. The breeding herd is expected to fall by a further 11,000 sows to 401,000by the end of this year.

Spud plantings and production

⁕ For clarification, the potato story on p21 in last week’s Farmers Weekly referred to GB plantings of 96,251ha in 2015 and production 5.5% lower than in 2014.

These figures excluded seed and starch, which brought the GB plantings total last year to about 111,000ha.

Landowners who let grass on seasonal agreements must play an active role in its management if they want to claim business tax relief, according to a recent ruling.

The decision concerned landowner John Allen in Northern Ireland, who let 4ha of pasture to a neighbour for seasonal grazing and silage.

As well as using the land for keeping animals sold in the market and grazing it himself over the winter, Mr Allen supplied fertiliser to the tenant and engaged a contractor to cut weeds and hedges.

When Mr Allen appealed after HMRC rejected his claim for capital gains tax taper relief (now abolished) the tax tribunal ruled he had occupied the land and had taken responsibility for its husbandry and should, therefore, be allowed relief.

“This new decision adds further weight and clarification to the previous case law,” said Jeremy Moody, secretary and adviser at the Central Association of Agricultural Valuers. “Although the case revolves around a conacre [seasonal grazing] agreement in Northern Ireland, the ruling is extremely pertinent to landowners with grazing or cropping agreements across the UK.”

Dawn Mayo, senior tax manager at Evolution ABS in Somerset, said: “This case highlights that landowners producing grass who wish to be treated as farmers for tax purposes, must play an active role in managing the grass crop. It is important that they take responsibility for fertilising, weed control and boundary maintenance if they want to qualify for tax reliefs.”

Farmers and landowners are warned not to rely on insurance to protect them against losses that may arise from nearby fracking operations.

Malton-based rural broker McClarrons has seen an increase since last summer in enquiries by worried land and property owners in Ryedale, where North Yorkshire County Council recently approved fracking plans at Kirby Misperton.

Chief among their concerns are damage to built property, groundwater contamination and potential for damage to land, crops and stock.

“Many think their insurer will pay for all losses they suffer and then simply claim the money back from the operator but it isn’t that simple,” said Becky Ireland, farm account executive at McClarrons.

“Most insurers do not recognise fracking as an ‘insured peril’ under a farm combined or similar policy, as opposed to traditional standard perils such as fire, theft or flood.

“Damage caused by earthquake and subsidence are generally covered under buildings insurance and if fracking led to these insured events, a claim would likely succeed. However, unlike home insurance, commercial buildings often do not have subsidence included as standard and cover may need to be added as an optional extra.

“Commercial property insurance wordings vary considerably and similar issues may arise in relation to damage to land, for example contamination or damage to crops.”

Most home and commercial property insurance policies also exclude losses arising from pollution or contamination. Environmental liability policies also vary, with some excluding losses caused by fracking, said Miss Ireland.

Clean-up costs normally fall to the polluter but proving the source may be difficult and costly, especially as it may occur over a long timescale and the polluter may no longer be in business or may not be worth pursuing financially.

Farmers and landowners needed to review cover and consider cover for legal costs to pursue damages claims and to deal with any environmental investigations should a loss occur, said Miss Ireland.

Last year the Infrastructure Act gave landowners protection from liability for third-party claims for loss or damage arising from fracking, for example where neighbours or their property suffer damage.

A 3.9% increase in the Global Dairy Trade index marked the continuation of a rising trend for the fortnightly online dairy commodity auction on Wednesday (1 June).

This latest increase will inject hope that farmgate prices will steady. The index has risen since marking 628 in mid-March, to 697 this week.

The EU Commission has also said it will increase the tonnage of skim milk powder that can be bought at intervention prices.

The ceiling has been raised to 350,000t, up from the 218,000t limit, which had been hit earlier this week. The commission had already doubled this year’s original ceiling of 109,000t in April.

MULLER FREEZE

⁕ Muller has frozen its milk price for the first month this year.

About 1,200 farmers in the Muller Milk Group will in July be paid 18.66p/litre for a standard litre, while the 650 members of the Direct Milk producer organisation will receive 18p/litre.

Producers will get slightly more on their cheques from the retail supplement, linked to sales at Aldi, Lidl and Morrisons.

FIRST MILK ‘BONUS’ AND CUT

⁕ First Milk is to pay farmers a bonus to reflect the co-op’s better performance.

Suppliers will receive a supplement worth 2p/litre, paid in stages. The first injection will come in June, with a 0.25p/litre dose.

However, First Milk has cut its “A” milk prices, effectively cancelling out the bonus. After the supplement, farmers across the six main milk pools face a drop of 0.32-0.44p/litre, to between 14.94 and 16.74p/litre for “A” litres.

DAIRY CREST CUTS

⁕ Dairy Crest has cut a penny off its milk price for the second month running. The 400 or so farmers supplying the processor’s Davidstow factory will from July be paid 20.72p/litre, based on a manufacturing standard litre. Dairy Crest has also promised no more cuts until at least September.

Two-fifths of steers are killing out above tougher weight limits, according to a study into the uproar over new beef grids and penalties.

More than 40% of British steers slaughtered in February had carcasses weighing more than 380kg, the maximum abattoirs are working towards through harsher deductions. That was a rise from 36% in the same month last year.

The research from AHDB Beef and Lamb showed less than 60% of young bull carcasses hit the 260-380kg target range this spring.

Heifers performed better, with 85% in the preferred range. But the proportion between 380kg and 420kg rose from 7% to 9% over the year.

Several big processors introduced new payment grids over the past six months, with penalties for heavier carcasses more strictly enforced.

Farming groups claim millions has been wiped off the value of cattle, adding to the pain of a price slump. But the meat trade defended the changes, saying retailers only wanted cuts of a certain size.

AHDB’s research also shows beef producers are meeting the standards fairly well for fat, with four-fifths of steer carcasses in February classified as 3 or 4L.

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However the conformation results raise questions. In February nearly half of steers and heifers made an R, which was slightly higher on the year.

But animals that killed out at Es and Us, high conformation grades that often score bonuses, were mostly in the heavier bracket, which draws more deductions.

AHDB market specialist manager Stephen Howarth said those animals currently fetched some of the best average prices – but the overweight penalties could now hurt their value.

“This could potentially have significant implications for those producers who are currently aiming to deliver animals with the highest conformation,” he said.

“They might need to adjust their system towards producing lower conformation, lighter animals.”

AHDB’s report is the first in a series aimed at improving the transparency of price reporting for beef.

The next, due by the end of June, will ask whether spec changes are linked to the slump in cattle prices.

The GB all-steers average has risen for the past four weeks, up 7.6p/kg to 318.4p/kg since the start of May. But prices remain more than 7p/kg down on the year.

NFU chief livestock adviser John Royle said the results showed farmers had not been given enough time to change their rearing and finishing systems.

He said the penalties may be nudging producers away from continental breeds, which produce high lean meat yields at a heavier weight, towards traditional, native breeds.

“Even though processors say they are going to reward the cattle they want, they cannot just change [specification] overnight,” he said. “Any changes need to be communicated well in advance.”

National Beef Association chief executive Chris Mallon said the weight limits were just an excuse for processors buying cattle more cheaply.

Farmers had been told to produce high-conformation, goodquality animals, but were now being punished, he said.

fwbusiness@rbi.co.uk