Farming Insight CLA column: Land prices are keeping farmers buoyant says the CLA’s Bennett Swayne
HARVEST 2012 has been variable across East Anglia.
In February we were looking at emerging crops under snow, in the spring many farmers were facing severe drought conditions before, ironically, being superseded by one of the wettest summers in 100 years.
Not to mention a distinct lack of sunshine.
A tumultuous combination for any farmer to contend with!
I have witnessed a divergence in yields and quality across the region.
Generally, the earlier harvested crops of rape and barley yielded at or above average.
Wheat has been very variable with light land generally performing better than the heavier soils, and much depending on the ability of farmers to thwart disease by timely applications of fungicides at critical times.
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For those whose crops have yielded well, prices are very buoyant if not too much has been forward sold.
For some whose yields and quality are well below par there may be problems of having oversold and facing having to buy in to fulfil contracts, or facing heavy deductions for poor quality.
Sugar beet generally looks reasonable but further fine weather will be needed to increase sugar content to overcome the distinct lack of sunshine during much of the summer.The ray of sunshine (in the metaphorical sense) continues to be the upward curve of our farmland values.
Research reveals that values are expected to break the �9,000 per acre barrier by the end of the year following a rise of two percent in the second quarter and one per cent predicted in the third quarter.
There is, however, some difference in performance between bare land and equipped land (land with houses and buildings).
Bare land values have increased by six per cent since the start of the year and equipped land values have risen by one per cent, demonstrating reluctance on the part of potential purchasers to take on the volatile residential element.
The amount of land for sale overall across the UK is at its lowest for the last five years but East Anglia has bucked the trend with a noticeable increase in land being offered to the market as farmers and investors look to expand their operation.
Buyers looking for large blocks of commercial farming land continue to experience frustration in the face of stiff competition for land of this type. Demand for smaller blocks is very dependent on neighbour interest.
Smiths Gore’s Farm Agency team recently sold the Hengrave Estate (1,337 acres) at a figure significantly above the guide price of �15million.
The achieved sale price is indicative of pent-up demand for large areas of commercial farm land in the region.
On the back of higher commodity prices, and generally improved profitability in the arable sector, we are seeing significant increases in rents being offered and agreed both on traditional and farm business tenancies.
Bennett Swayne is a member of the Country Land and Business Association (CLA).
He is also a rural chartered surveyor based at Smiths Gore’s Newmarket office.
To become a member of the CLA in the East, telephone 01638 590429 or email email@example.com.