The Heady Heights of Land Prices

BY BEN EAGLE

There are many ways of getting into the farming sector today but if you want to farm in your own right on your own land, unless you are fortunate enough to inherit land, you have to be very wealthy indeed. In fact it will cost you far more than it ever has in the past to buy land, at least if you want to farm on prime arable land. This comes at a time, at least in the UK, when the very future of agricultural viability as a means of making a living is uncertain. Clearly, demand doesn’t wane when it comes to owning acres.

A new set of statistics covering agricultural land prices and rents across most of Europe from 2016 has recently been released and it confirms the bizarre nature of the price of land. Right at the top of the list in terms of the national average price of bare arable land is the Netherlands at a significant €63,000/ha (£54,800), although it should be said that this pales into the background when you consider the most expensive region in Europe, Liguria in Italy, where one can face prices as high as €108,000/ha (£94,000). Renting arable land in the Netherlands is similarly expensive, setting farmers back an average of €791/ha (£688/ha) and a significant €1536/ha (£1337/ha) in the Flevoland region.

In Britain land prices have inflated enormously in recent years, demand mostly coming from the City and affluent lifestyle buyers who can afford for the tight margins in farming to cause less worry than somebody wholly reliant on the land for their income. The UK is fourth in the European league table, behind the Netherlands, Italy and Luxembourg, with an average price in 2016 of €25,742/ha (£22,405) for prime arable land.

One of the key questions regarding Brexit is how, if at all, changing policy might impact on land prices in Britain and how this might affect accessibility in farming and the way the land is farmed. In the short term, land prices have been helped by the fall in the value of sterling, attracting affluent overseas buyers and relative confidence in the strength of the market. In the long term, profitable diversified farm businesses will be key to sustaining land prices and improvements in technology, efficiency and access to markets will also do their part. It is possible, some might even say probable, that overall farm support in terms of subsidy available will fall, and if the current government rhetoric is to be believed direct support will falter in favour of payments for ‘public goods’. I believe that landowners will adapt to the situation they are faced with and do all they can to sustain the value of their businesses and therefore also the value of land. The difficulty that comes with this is that the issue of accessibility is swept under the carpet. As the price of prime land increases so does (usually) the price of more marginal land and the price of rents. Unless something radical happens it is unlikely that most new entrants will be their own landlords any time soon.

Ben Eagle generally writes about food, farming, the environment and sustainability. Elsewhere, he has written for The Guardian, Farmland Magazine and the Sustainable Food Trust. His website www.thinkingcountry.com was highly commended in last year’s UK Blog Awards. You can follow him on twitter @benjy_eagle or join the thinkingcountry facebook page.

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