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THE PARLIAMENTARY REVIEW Highlighting best practice 24 | KNIGHT FRANK R ural land and estate owners in the UK are facing more challenges than ever before. These range from increasingly volatile commodity prices and unpredictable weather, to changing tax, political and regulatory regimes. On top of this they have had to cope with the tortuously slow unveiling of yet another round of Common Agricultural Policy (CAP) reforms. Just standing still in such a complex, and what can sometimes feel hostile, environment requires expert advice, but Knight Frank's rural property teams are committed to helping their clients to venture beyond the status quo to create forward-thinking, innovative and sustainable businesses that deliver on their owners' aspirations. One of the paradoxical dilemmas for the farm or estate today is that, while the capital value of their principal underlying asset – farmland – has been increasing rapidly, the income-generating potential from traditional agriculture has failed to keep pace. Average farmland values have increased over the past 25 years, according to the Knight Frank Farmland Index. This is in stark contrast to wheat values over the same period, which, via an extremely volatile journey, have virtually stood still. This does not take into account the increase in cereal yields over the past quarter of a century (sse graphs on page 26), but neither does it reflect inflation – effectively prices are significantly lower today than they were in the last century. What this means is that most estates can no longer rely solely on the returns from agriculture, either from in-hand farming or tenancy agreements, to remain economically viable and support the upkeep of their historic, and usually expensive to maintain, fabric. Even if this still remains theoretically possible, the volatility of commodity markets suggests the creation of more diversified income streams is a strategic imperative. Knight Frank » The world's leading independent property consultancy » Operates from over 335 offices in 52 countries across five continents » In 2013 the business sold or purchased £30 billion of residential, agricultural and commercial property for its clients, and valued £720 billion of assets Making the most of renewable energy – Knight Frank's Paddy Hoare (left) has helped to establish a woodchip business for one client Ensuring best practice in building consultancy – Knight Frank's James Carter-Brown ABOUT KNIGHT FRANK