Concerns over record prices for farmland

PRICES for Suffolk farmland have hit an all-time high but fears have been expressed about their wider impact on rural communities.

A surge of interest in commercial agricultural land has pushed the region’s average price-per-acre to �5,813, according to a survey by the Royal Institute of Chartered Surveyors (RICS).

But concerns have been expressed about the impact the price hike will have on farmers’ rents and the availability of affordable rural housing.

Wil Gibson, chief executive of Suffolk Action with Communities in Rural England (ACRE), said: “Technically we’ve had a recession but the price of land has been increasing, lots of investors are saying land is a good bet.

“Our view is we’d be concerned if these increases mean less parcels of land becoming available for affordable housing or that it is at a price that does not make affordable homes affordable. But it’s early days.

“The need for affordable housing is certainly there – we undertake a large number of housing needs surveys and there’s always demand.”

The National Farmers’ Union (NFU) said although some of its members were investing for the future, the land price increases could result in higher rents for others.

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Phil Bicknell, NFU’s chief economist, said: “In recent years, the lack of farmland on the market has contributed to the cost of land rising, while strong prices for arable crops have added impetus to demand.

“Current demand in Suffolk and other areas is not just a result of better farmgate prices but of expectations regarding price levels for farm products for the long term.

“Globally, expectations are that agricultural commodity prices will be at a higher level for the coming decade and some UK farmers see good potential returns for their businesses in the future.

“These strong farmland prices are also mirrored in higher rents for arable and grassland as the RICS survey identifies.

“Although some farmers are investing for the future, others may face higher rents as a result of stronger prices, adding to the current pressure on farm margins caused by rising costs in general.”

Sue Steer, RICS spokeswoman, said: “The first six months of 2011 saw farmland prices in the East of England increase to record levels.

“While supply to the market increased for the first time in three years, it wasn’t enough to meet demand from potential buyers of commercial land which, once again, kept prices high across the region.

“With commodity prices still very high, many commercial farmers appear more keen to expand their businesses rather than sell their land.”