A Green Revolution Has Begun
10/07/07

Huge opportunities await the farmer who joins the challenge to meet the targets to produce heat and power from renewable sources by 2020. From decades in the doldrums, the farming and land management sector can now be seen as providing the solutions, not problems, for the economy.

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Speaking at the annual conference, ‘Fuelling the Future’ of the Institute of Chartered Accountants’ Farming & Rural Business Group, Paul Temple, Vice President of the National Farmers Union, said that much of the UK’s future energy will be based on the land, rather than in underground fossil deposits. Farmers have a key role to play in this challenge. He said:

“With climate change and energy security two of the greatest issues of the age, many believe that climate change [do we mean energy security?] is more serious to our planet than terrorism. Bill Clinton said that if he was running again for President it would be on a single issue – energy security. In the UK we are heading in the right direction in setting binding targets for the production of bioenergy. The Government’s new Energy White paper demands big commitments and big targets, so the challenge to the farming sector is obvious and one which should be embraced.”

Paul Temple continued:

“For the first time in half a century, farming and land management can be seen as providing solutions, not problems. In the longer term agriculture’s contribution to heat and power are likely to be a bigger contribution to mitigating climate change. In order to meet the targets for renewable energy, there will need to be a variety of mechanisms and incentives – creative incentives rather than subsidies. Talking to accountants, many of these incentives will raise tax issues.”

Adding to the debate, Rod Leslie, Head of Programmes at the Forestry Commission, encouraged farmers and land owners to take advantage of their woodland areas to provide an economical alternative to fossil fuels. He said this presented new business opportunities for the farming sector as well as the advantage of bringing unmanaged woods into management, thus contributing to a sustainable energy resource.

Andrew Ayre, Farming & Rural Business Group North East spokesperson and partner at Greaves West and Ayre, Berwick,, said:

“If the UK aims to encourage farmers to invest in capital expenditure on bioenergy, tax incentives are likely to be needed to encourage this. However the last Budget did little to encourage farmers to invest, with the phasing out of the agricultural building allowance, the removal of the first year allowance on equipment and the reduction of the writing down allowance on machinery from 25% to 20%. On the positive side, a new £50,000 investment allowance has been announced, but until further details of the new relief have been published it will not encourage farmers to make major investment decisions.”

He added:

“Further, the possible inheritance tax cost of diversification may act as a disincentive to farmers. Currently farmers qualify for agricultural property relief of up to 100% on the value of agricultural property occupied for an agricultural purpose. However, whilst production of crops for human consumption qualifies as an agricultural purpose; production of crops for fuel may not. In view of the tax risks, many farmers may decide not to diversify, which may not be in the best interests of UK plc.’

”As professional business advisers, our role is to ensure that those who do take up the challenge are aware of the risks and benefits of their new role in contributing to fuelling the future in the UK and beyond.”

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