Consultants Column

estate consultancy

Welcome to our regular rural column where two of our consultants give their views on politics and estate matters. 

If you look back at agriculture and the rural economy over the past 25 years there have been momentous changes, and the pace of change is increasing. Agricultural subsidies have been reduced and decoupled from production, making farmers more market focused. Prices have fallen way behind inflation and this has led to fixed cost reductions, yet capital values have risen to the extent that there is no longer any relationship between price and return. The introduction of the FBT has led to a more flexible and innovative landlord and tenant sector.

Farms and estates have diversified into renewables, environmental, leisure, property businesses and even retail. If you were to be able to look forward another 25 years I expect you would see that this change has accelerated and many farms and estates will be involved in activities and enterprises that have yet to be dreamt about.

Much of this change has been driven by government and European policy. The direction of travel for the CAP, led by the UK, is away from direct payments to farmers, and towards payments for public goods, but the general squeeze on public spending means that more will have to be delivered for less money.

The renewable sector has become a political football, with repeated policy and priority changes leaving confusion and reluctance to invest in its wake. In addition, governments are waking up to the fact that property is easier to tax than people and if you add to that the concern that some of the capital tax advantages that agriculture has enjoyed might come under threat, the outlook for farms and estates is pretty uncertain. 

All this means that change is in the air. Profitable production of commodities which are traded globally will become more challenging as developing nations, unhampered by environmental regulation and assisted by technology step up to the mark. Cereal, oilseed and protein producers will have to accept that they operate in a global market, which will mean price volatility and exposure to exchange rate fluctuations. UK agriculture will have to improve performance beyond recognition, with the industry raising standards to those currently achieved by the top 20% as well as seizing any opportunity to turn a profit. 

The food supply chain, with massive imbalances in favour of the retailer, will offer very little assistance; the consumer, after a long recession, is more price-driven than ever.

There are other, new factors that will come in to play. The carbon market, currently a dysfunctional mainly illustrative market, driven more by regulation than economics is certain to mature. The rural sector, almost unique in its ability to capture carbon, should benefit, reinvigorating the renewable and forestry sector. Offsetting for environmental degradation, currently an embryonic concept, will become mainstream and will start to provide a significant income for many estates and farms, under the broad heading of environmental markets.

The way we work with water, both in terms of use, protection and flood management will also change beyond recognition. Other opportunities will arise as more land is developed for housing, more infrastructure projects are developed, leading to business relocation prospects. General changes in our living habits will lead to diversification opportunities that have yet to be even invented….

What does all this mean?


Firstly, and most obviously, the successful farming or rural business is going to have to improve, it is going to have to do more or produce more for less. Secondly, it must understand what it is doing and make changes based on a well worked out business case. Thirdly, it must utilise capital effectively, prioritise expenditure and control costs, in other words utilise a financial discipline which is currently rare in the sector. Finally, it must understand and manage risk effectively.  

‘Knowledge’ has never been more vital. Keeping abreast of changes and reacting fast will be increasingly important and creating effective business plans on the back of it is paramount. In my role with Fisher German, if I can help to raise awareness of what lurks around the corner I will hopefully fulfil an important role.

The burden weighs heavy!

March 2015

Harry's View Harry Cotterell OBE

Harry's View Harry Cotterell OBE

What clients want James Hervey-Bathurst

What clients want James Hervey-Bathurst

Many firms offer land management services but there is definitely a range of skills and services which sets apart the best. 

Clients are far more likely to be loyal to a firm which offers a high level of service and good client relationships will flow naturally from this. 

Below is a list of what clients should expect from a top class service.

From the firm:

 
  • Up to date professional advice and rural sector market news/information: legal, financial, regulatory, political information, all at a fair price; transparency and no surprises on charges.
  • Regular sector reviews/ newsletters and strategic vision.
  • Offer of occasional seminars or visits/away days.
  • Work experience for their children.
  • Senior partner contact from time to time.
  • No cross-selling with other professional advisors except indirectly via joint seminars etc with other professional firms. However, bringing in experts/specialists from other internal teams is expected.

From the land agents:

 

Absolute attention to routine estate matters: maintenance, repairs, rent reviews, rent arrears, access/trespass, encroachment compliance, RPA/EA/EN etc.

Realistic budgeting with prioritised spending programme. Allowance for contingencies/emergencies.

Delivery and explanation of monthly accounts, even when prepared by third parties. Control of debtors and cash balances.

Good professional relationships with other advisers: accountants, solicitors, architects, planners etc and control of their costs.

Good professional relationship with Local Authority and other officials, aiming to work with rather than against them. Client to be invited to all meetings with officials, even if the wiser course of action may be agreed that he or she should stay away.

Efficient meetings management, to include:

  • Pre-submitted agenda with supporting papers to allow client to prepare, ideally indicating points that he or she needs to resolve.
  • Punctuality.
  • Follow up of action points from previous meetings.
  • Agenda may include list of longer term points to be addressed so they are not lost from sight
  • Joint project meetings where all involved parties are present, especially if government officials are involved ie on HLS schemes or planning matters. They may take longer to organise, but will save time overall.
  • Offering professional views on action (ie not simply saying: “It is up to you”), where you can justify it on the grounds, for example, that is has worked for another client
  • Flexibility on timing ie willingness to meet occasionally at the weekend, if the client works off the estate.
  • Coming up with solutions, not problems. Taking responsibility and apologising when appropriate. Sticking to your word. 

Well written and courteous letters/ emails

Communication at a modern pace or as agreed with the client:

  • Returning telephone calls promptly. Answering emails within 24 hours or less or asking another to do so and say when you will be able to yourself.
  • Using spreadsheets to assist analysis and decision making.

Bringing new ideas to the client, based on the experience of others.

Encouraging the long term view and prompting regular, but not frequent, strategic meetings with other advisers and family members where other advisers or the family may be reluctant to take the lead.

It is of course important to agree levels of service with every individual client as each will want something slightly different.

 

April 2015


contributors

contributors

Harry Cotterell and James Hervey-Bathurst will be regular contributors with Harry covering political matters and James estate matters.

01530 412821

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Harry Cotterell

Harry Cotterell
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James Hervey-Bathurst

James Hervey-Bathurst

Harry Cotterell, former president of the CLA, will be helping the firm better understand the economic and political issues which affect their clients’ land and business.

01530 412821

James Hervey-Bathurst is a director of his highly diversified family estate company in Herefordshire. James also works with Christie’s and as Regional Chairman (Landowners), at Coutts & Co. 

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