Norfolk built its heritage on agricultural innovation. To meet the challenges ahead, the Norfolk rural economy will need to rely on innovation again. We face an era of unprecedented regulatory change, where food production is not the key driver.

The pressures on ‘conventional’ farming have no doubt been building in environmental terms, particularly in water usage and the restrictions on agricultural chemistry.

However, the changing support regime and the unknown trade context faced by the UK introduces great uncertainty to farm business management. At a fundamental level, farm businesses have to ride out uncertainty every growing season, so the tolerance for risk in many businesses is slim. Riding out short-term disruption is now the primary concern, though an eye on the mid-term horizon is crucial for a successful business: here we highlight four key areas impacting on the rural economy in Norfolk.

1. Productivity and Innovation

Direct support payments for farming and agricultural land use are likely to be phased out, but food production will remain the core land use in Norfolk, particularly on the most productive land. There will be a renewed need for farming operations to achieve heightened efficiencies to ensure a viable business. Technology has already driven a 64% increase in UK agricultural productivity since 1974, and Norfolk is a hotspot of agricultural expertise with the potential to integrate the innovation required.

Despite an intellectual powerhouse in the shape of Cambridge University at one end, it is the Norwich end of the Tech Corridor that is advancing the agri-tech and plant science sector. 6.1% agri-tech employer growth in the tech corridor over five years far outstrips the national average of 0.29%. The map below shows just some of the wide range of enterprises behind agri-tech in Norfolk, the future success of which will be important in balancing rising environmental standards and plateauing yields.

2. Water: the key resource

Arable farming accounts for 79% of the farmed area in the East of England, against a national average of just 52%. In Norfolk, prime arable locations are found in the Broads in the North and East and Fens in the West – with both areas focussed on food production. Going forward, the balance between production and the stewardship of the natural environment will come into increasingly sharp focus.

This is most clearly expressed by the competing demands on water – a finite resource that will put sustained pressure on land management decisions going forward. Some areas have already been affected by the removal or reduction of abstraction licences, whilst other farms are yet to receive confirmation that their licences will be renewed. New powers in the draft Environment Bill may signal further restrictions are likely.

Initial reform has affected Broadland farmers, though irrigation rights on light Breckland soils may also come under scrutiny. These soils are naturally less fertile and may struggle to retain productivity levels without irrigation. Therefore investment in infrastructure for water is vital, in particular, winter fill reservoirs with updated networks. Failing this, it is likely that sensitive areas will see a reversion to grassland or marginal dryland cropping.

At the other end of the soil-water spectrum, Fenland and peat soils have been drained to produce some of the most productive farmland in the country. This process also results in the release of the carbon that was stored in those soils. This can be reversed by re-wetting, but wetting peatland soil vastly reduces the number of cropping options available to farmers. Peatland restoration is one area being given substantial attention in policy development and, given the direction of both public sentiment and party policy, it will continue to do so going forward.

3. Accounting for the environment

Water is clearly only a part of the environmental landscape, and land managers must also equip themselves to take a holistic, quantified approach to what they deliver beyond crop production. The benchmarks for valuing the environmental, social and financial benefits that the farmed environment delivers will be a huge change in the sector, and we expect to see markets created for these Ecosystems Services. These will be diverse, including for example agreements with private developers for the management of flood plains in a river system above a new development scheme, or collaborative habitat management on a landscape scale towards particular indicator species. All will depend upon being able to deliver a demonstrable environmental gain.

4. Land availability and value

Such change in a sector inevitably feeds through to transactional markets. The commercial farmland market in the East of England accounts for an average of 17% of the national market over the past 25 years, though is down significantly in 2019 as political uncertainty continues to oppress the release of land to the market across the United Kingdom.

In Norfolk supply to the open market is between 3,500 and 4,000 acres per annum. Against a productive area of around 990,000 acres, this is an incredibly small turnover (0.35% per annum) and therefore average values do not accurately represent the market.

The key trend in price is variance, arable land has transacted in Norfolk from £7,500 to £12,000 per acre. Neighbours will pursue rare opportunities to secure adjoining land while overseas investors are actively looking at prime assets to capitalise on a weak pound and this is sustaining top prices. Conversely, land in less popular locations can be very price sensitive, a trend we expect to continue.

Regulatory change will bring difficult succession planning conversations forward for many who have been delaying or cushioned by the subsidy regime. For those looking to retire, now might be the right time to restructure or sell. The concern is that a delay of three to five years may coincide with an increase in unplanned land sales by vulnerable businesses following the removal of direct payments, where the increase in supply may have the effect of constraining price.

Paludiculture: Rewetting wetlands can retain productivity with investments in agri-tech

It is possible to cultivate wet peatlands for agricultural products while maintaining the ecosystem services they provide. Paludiculture harvests biomass above ground leaving which remains to preserve and potentially increase peat levels and sequester carbon.

There are financial, technical and regulatory challenges that need to be overcome before this ‘best of both worlds’ approach becomes plausible. Research is already underway across Europe, with funds being allocated to projects in the UK too.

_{Read the articles within Norfolk and Norwich: Adapting for change below.}