Farming News - Growth In Farmland Values To Slow Down
News
Growth In Farmland Values To Slow Down
The increase in UK farmland values to become the fourth highest in Europe equates, in football terms, to a rise from mid-table mediocrity to a Champions League place but the agriculturally challenging year of 2012 will act as a brake on the pace of growth, a farmland agent told a London conference on Thursday (February7).
The wet weather and difficulties faced by farmers last year has dented morale in a market that has risen steadily for several years but the best arable farms – those units able to deal with the effects of too much or too little rain – will still attract prices of £10,000 per acre or more, approximately 130 delegates heard at Strutt & Parker’s Rural Land Briefing at the Westbury Hotel.
Farm agent Mark McAndrew said UK land prices, underpinned by a historic low in supply, had risen to fourth highest in Europe, behind the Netherlands, Ireland and Denmark. He said: “It’s what in football terms you would describe as a rise from mid-table mediocrity to a Champions League place.”
He said that strong commercial arable units will continue to command premium prices but the type of soil and its ability to withstand the vagaries of the British weather will be key for any farm entering the market in 2013. He added: “We will see a slower growth in land values in the years to come. I think we have reached a plateau and I don’t think we are going to see significant changes in land values for two or three years.
He also described huge variants in sale prices across counties, let alone the UK, with, for example, a £4,000 an acre swing in Lincolnshire last year. “Land values vary by considerable margins and valuing land has never been more difficult. There is also a bigger gap between buyers and sellers than we’ve ever had before.”
Farmers make up the highest proportion of buyers at 46%, although investors are increasing their cut of the market and it is the investors who will pay a premium for the best in class arable farms, he said. “Farmers continue to buy land, but perhaps not surprisingly, their mood is dented following the difficult year of 2011/12 which has rolled on into the current harvest year,” said Mr McAndrew. “Farmers have got very wet recently. They are not in a great mood and they are not going to pay premium prices. Perhaps right now they are not in the mood to compete as strongly as they did a few years ago.”
Mr McAndrew also suggested that feeding the world may not be quite the problem it was made out to be and that population growth estimates could be higher than the reality. “There is no doubt that GM will have to be one of the answers but maybe it is not all about growing more and more food. The focus on waste and how we deal with it is moving up the Government agenda. In 2011, 1.3billion tonnes of food, about a third of global food production, was lost or wasted. We say that land values are rising because land is such an important commodity to provide the food that the enormous world population will require. But, actually, perhaps it already does provide the food.”