The average value of bare agricultural land in England and Wales fell by 1.7% to £7,313 an acre in the second quarter of 2017, according to the latest index data.
The slide takes the fall over the last 12 months to 6% but over five years values are still up by 16% and over 10 years by 97%, the figures from the Knight Frank farmland index show.
Andrew Shirley, head of rural research at Knight Frank said that on the evidence of recent sales in southern and central England, the value of good quality arable land has started to rebound.
Indeed, the price achieved has approached £10,000 an acre in some cases. ‘Although this is some way off the values being paid at the height of the market in the middle of 2015, it suggests that demand remains strong for the right product,’ he explained.
‘A number of factors are contributing to this. Helped by the ongoing weakness of sterling, the value of the main agricultural commodities like wheat and beef continues to edge up, which makes farmers feel more confident, and even milk prices are heading in the right direction,’ Shirley pointed out.
He added that new DEFRA minister Michael Gove has also helped to calm the nerves of those worried about the impact of Brexit by promising that producers will continue to receive the equivalent of their Brussel’s subsidy cheques until the end of the current parliament, which could be 2022.
‘But perhaps most importantly there is still not that much farmland for sale. According to data from Farmers Weekly, there has been no year on year increase in the amount of land and farms publicly advertised for sale. At the same time there is still a wide variety of potential buyers looking for land, either farmers seeking to expand, investors hunting for long term secure assets, or rollover driven purchasers,’ said Shirley.
However, the index report also reveals that demand for upland or more marginal farmland is more muted at the moment because of the heavier reliance on EU farm subsidies so there is an emerging split.
‘Until there is clarity regarding how the UK government will replace the European Union’s Common Agricultural Policy (CAP), this trend looks set to continue. But demand and values could quickly recover if Mr Gove’s eagerly awaited new policy recognises and rewards the wide ranging environmental, social and landscape amenity provided by the uplands,’ Shirley concluded.
