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TMCNet:  Once again this year we have seen a low volume...

[December 23, 2013]

Once again this year we have seen a low volume...

(Farmers Weekly (UK) Via Acquire Media NewsEdge) Once again this year we have seen a low volume of land for sale on the open market. At about 143,500 acres it is just about half the area publicly marketed in 2000.

It seems unlikely that volumes will rise much next year, but regional and local factors are clearly going to be more important than ever.

Our agents’ reviews demonstrate that in some areas the market is exclusively local, in others, the number of potential farmer buyers is matched by those from outside the industry. Almost everywhere, quality and value are more closely linked than they have often been in the past.

While small farms are sticking in some areas, they are shifting in others. The residential or lifestyle market is strong within commuting reach of London, but weaker elsewhere, and buyers are more choosy than ever.

CAP reform will also present its own devolved twists for the land market in 2014.

An improvement in the wider economy could tempt investors to cash in gains they have made on farmland in the past few years and switch to other investments.

This could bring some much wanted volume back into the market, but many consider that a 10% increase would do more than steady the market.

Well-equipped livestock and dairy holdings are in demand, but wafer-thin margins for many producers mean holdings that need investment or with limited land will be increasingly challenging to sell.

Many other factors will influence land prices and demand in 2014: ? While no one expects an imminent base rate rise, the likelihood of higher interest rates in 2016 or 2017 may well act as a check on some farmer buyers next year ? In many areas the private market has been increasingly important through 2013, but a rise in the volume of land on the market would see that change too ? A sensitive housing market holds the potential for some development land sales and for conversion of farm buildings to residential use ? For an increasing number of English farmers looking to expand, Scotland offers the best value and opportunities ? If wheat prices stagnate at current levels we can expect a steady start to the arable land market in 2014. True cost-of-production calculations don’t leave much profit at £155/t ex-farm for the average grower ? Anaerobic digestion plants are having an effect at local level on land rents and values.

The market looks set to be interesting, if challenging.

(c) 2013 Reed Business Information - UK. All Rights Reserved.

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