Dawn Has Broken On The Golden Age For Farming

9th January 2012

In the summer of 2008 – just as the first banks were beginning to collapse and arable land reached £7,000 per acre – I predicted that it would not be long before large commercial blocks of arable land would make £10,000 per acre. What I did not expect was that this would happen so quickly.

At the beginning of 2012, the world is a very uncertain and unsettled place. We have come to expect nations and currencies to collapse under the strain of financial mismanagement and the past excesses of credit booms and consumerism. We are also faced with the world’s burgeoning population (destined to grow by 2 billion over the next few decades). All of this is good news for the farming industry and agricultural land values both in the UK and overseas. This is why I believe that the golden age of farming is here and here to stay for the foreseeable future.

This bodes well for those already in the farming sector. The downside is that those people seeking to enter the industry in the future will find it increasingly difficult (and expensive) to do so. Farms and land – whether they be to sell or to rent – are getting snapped up quickly, often before they come to the market. 2011 has seen a significant increase in the number of deals being done privately from small blocks of land up to large commercial units stretching from Lincolnshire to the Scottish Borders. Farmers with retained profits made within the industry have led the market; they compete with non farming investors keen to avoid paying inheritance tax and self made business men rolling over their accumulated wealth into a safe haven. No longer do we hear from the city based financiers who dominated the market in the early 21st Century.

So, what does the future hold?

Certainly not a fall in land values although they may level out for a short while whilst the world runs around like a headless chicken worrying about how much money it has lost. That will soon pass and everybody will readjust to having less money than they had before. Demand for food will continue to grow and worldwide financial instability will continue for the next three to five years. These factors will combine to support the farming industry (and rising land values in the UK and abroad). Foreign money (for example China, India and Brazil) will bank roll the world and investors from these countries may find it tempting to start buying land in the UK and Europe – they will favour those countries that are politically stable (very few countries will be financially stable). Even if there are fundamental changes to the tax regime – making it less attractive for tax reasons to own agricultural land – this is unlikely to materially affect or prejudice the growing prosperity of the agricultural industry and, on its back, land values too.

The next generation of farmers – and those of us who support and work for them – can look forward to a golden era.

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