Biodiversity net gain explained: Grain market daily

• UK feed wheat futures (May-24) closed yesterday at £196.10/t, up £0.75/t from Monday’s close. New crop (Nov-24) futures gained £0.45/t over the same period, to close at £208.25/t.
• Domestic markets followed support in both European and US wheat markets yesterday.
• France is expected to see a fall in winter cereal planting after heavy rain, according to the Farm Ministry. The Ministry projects the French soft wheat for the 2024 harvest at 4.49 Mha, down 5.1% from harvest 2023 and a four-year sowing low. Though rapeseed area for harvest 2024 is forecast up 0.5% versus harvest 2023, at 1.35 Mha.
• Global tenders continue, with today Jordan state grain buyer tendering to buy up to 120 Kt of milling wheat from optional origins to be shipped in March and April. Eyes on who remains most competitive in global tenders.
• Paris rapeseed futures (May-24) fell €6.75/t yesterday, to close at €441.75/t. Nov-24 futures fell €5.75/t over the same period, to close at €447.75/t. Rapeseed futures felt pressure with Chicago soyabean futures (May-24) yesterday closing down 0.7%, on forecast rain in Brazil.
• Yesterday also saw wider pressure, both on Malaysian palm oil futures, as well as pressure on nearby Brent crude oil, falling 3.7% to $73.24/barrel.

With the agricultural policy environment changing, delivering environmental benefits through government schemes or via private markets is becoming increasingly in focus by many businesses across the sector. Today, we unpack definitions around Biodiversity net gain (BNG) to give clarity on what businesses could expect when exploring this area.

This article is adding to the growing analysis on carbon markets available here on the AHDB website.

What is Biodiversity net gain (BNG)?

BNG is an initiative to boost the biodiversity of new development sites in England by 10% from its previous baseline prior to the development, which will come into effect from January 2024. It will be mandatory for all developers to implement land into BNG under Schedule 7A of the Town and Country Planning Act 1990, through habitat creation or enhancement, whether on-site or off-site. This is where farmers and landowners come in, with this mandatory need to improve biodiversity, developers may approach farmers to use their land as an off-site solution. This is in the form of ‘units’ that can be sold to developers as BNG credits, which can provide additional income on farm.

These units come with some caveats that we will explain throughout this article, including specific actions that need to be undertaken to gain credits in an off-site agreement. These credits can be sold by landowners in a lump sum, staged payment or results based.

Take a look at Government Statutory Biodiversity Credit Prices (these are not guideline prices for off-site units, so prices could vary).

Proving additionality

For offsetting credits, additionality should be proved, where the change in biodiversity would not have happened without the funding from credits. In this case, the gains made in improving biodiversity either on or off-site for developers would not have occurred without the investment (purchase of credits). There should be additional, measurable, benefits to the biodiversity creation and enhancement that would not have taken place without the investment into credits. Having proved this additionality, farmers and landowners will be paid per credit per hectare of land that is under BNG. However, this land comes under some rules concerning stacking and bundling, and the multiple use of one piece of land.

Read more information on stacking and bundling.

Main considerations

One thing to consider is the length of the contracts entered under BNG. These contracts will have the habitat secured for at least 30 years through planning or conservation agreements. This is important to note if you are a tenant farmer, and you should have a look at the length of contract you are under. 

Read more information on tenant farmers' rights in carbon markets.

Another thing is the different timescales for BNG and carbon credits. As mentioned above, BNG credits may take longer to come into fruition than other schemes, it is worth exploring the detail of BNG, carbon and other schemes to know the options available. This could leave a funding gap in the time between the sale of carbon credits and sale of BNG credits.

Finally, think about the cost of taking land out of production and maintenance of BNG, to complete BNG for 30+ years. Is the value provided by BNG credits enough to compensate for a loss of productive land, and is there another plot that is more suitable?

For more information on BNG markets, take a look at these Biodiversity Net Gain definitions. You can read about the ever evolving analysis of carbon markets and wider agricultural policy change on the AHDB website.

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