Industry Eye: Three key subjects that should be mulled over in the coming months

Drilling and potato harvest hasn't been the easiest this autumn and the torrential downpours that have been experienced across the county have hampered efforts to get finished, but with a dry spell, most seem to be getting near the finish line.
By The Newsroom
Published 15th Oct 2010, 16:51 BST
Updated 15th Oct 2010, 16:52 BST

So with the days getting shorter, I thought I would share a few things that you may wish to review and research over the winter.

1 Renewables – the press is full of information at the moment, and the number of fliers coming through the letter box is astonishing. Headline figures grab one's attention and rightly so as the potential returns look good. What is fantastic about most renewables projects (except biogas) is the lack of management required once operational.

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A wind turbine just turns, maintenance is done under contract and all you need to worry about is sending an invoice to your electric supplier quarterly. Likewise with PV (photovoltaic) and it provides good cashflow to the business which is not reliant on whether a soft commodities stockbroker decides to get excited about wheat futures or whether you'll get five inches of rain during the middle of harvest and ruin crop quality and yield.

The risk is whether the wind blows or the sun shines and in regards to the capital, the extent and nature of the warranty that the manufacturers provide on the equipment. Whilst wind has been a centre of attention, PV is coming to the fore, and interestingly the big wind farm developers now seem to be turning attention to developing PV farms. Understanding the income, running costs and return on capital for the developers is key if you are negotiating any lease arrangement.

2 Local Development Frameworks – for the average layman, the LDF is effectively your local councils plan for the future development in your region and if you have sites that have potential, you need to be active in their promotion to the council. The coalition Government's drive for 'localism' in the planning system has already seen the abolition of regional planning bodies and the change in classification of gardens to greenfield land. Further changes are likely to follow; notably the controversial possibility of allowing affordable housing in rural villages 'without planning permission' – much maligned in the press.

For those with strategic land holdings there a few simple steps early in the process that could reap high rewards over the coming years, so spend a bit of time thinking over whether or not you have any potential development land and how you can promote this actively.

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3 Subsidy & Stewardship Agreements – The euro continues to show strength against sterling and I would recommend you look at the options for locking in for the forthcoming years and what rates are achievable. If you look back three years, the exchange rate was very different and resulted in significantly less subsidy to farmers; given that you can lock forward for several years, this reduces the risk. From what we understand, the forthcoming budgetary cuts are going to impact on new HLS agreements, certainly in the short term.

If you have outstanding capital works, you'll probably be unlikely to carry forward, so get them done this winter. Those in the HLS planning stage, be careful not to waste time and money if the pot of money suddenly dries up. ELS, OELS and UELS are unlikely to be subject to budgetary cuts though.

CW 16/10/10