Price Of Farmland Trebles In Decade And ‘Set For £10k An Acre’

The price of UK farmland has trebled in less than a decade to hit a record high, according to a new survey, as researchers predicted the average price of an acre could soon hit £10,000. Prices for farmland are climbing, a new survey shows. Photo: Alamy By Emma Rowley 7:00AM BST 23 Aug 2013 Interest from farmers and investors buying to rent land to farmers pushed the cost of farmland to £7,440 an acre across the UK in the first six months of this year – three times the price fetched during the same period in 2004, when an acre cost just more than £2,400. Commercial farmers want to expand production to take advantage of the long-term trend for rising food prices and economies of scale, according to researchers at the Royal Institution of Chartered Surveyors (RICS), who produced the data. While commodity prices have eased in recent months, demand for food is expected to remain on an upwards path in the long term, driven by growing populations and changing diets around the world. The appeal of farmland as a “safe haven” investment to rival gold also plays a part, researchers said. Farmland has outperformed a number of alternative asset classes, which – combined with tax breaks – has enhanced its appeal as an investment. Analysis by estate agents Knight Frank has shown that for years gold was the only asset to outperform farmland, but in the short term this situation has reversed as the price of the precious metal has weakened. “The growth in farmland prices in recent times has been nothing short of staggering,” said Sue Steer, spokeswoman for RICS. “In less than 10 years, we’ve seen the cost of an acre of farmland grow to such an extent that investors – not just farmers – are entering the market. “If the relatively tight supply and high demand continues, we could experience the cost per acre going through the £10,000 barrier in the next two to three years.” The most expensive farmland was found in the North West – where supply is tight – at £8,813 an acre, the RICS survey showed, while the cost was lowest in Scotland, at £4,438 an acre. None the less, prices north of the border touched record levels for the Scottish market. Some areas are already past the £10,000 mark, surveyors said. A 13.5 acre block of land near Antrobus near Northwich, which was suitable for potatoes, recently went for well over £12,000 an acre, said Andrew Wallace at Cheshire-based auctioneers Wright Manley. He reported “keen farmer competition for extra land”. Graham Bowcock, a surveyor, said last year’s wet summer and a tough winter and spring that followed did not seem to have diminished the appetite for land purchase. “The big [farmers] still want to get bigger but continue to be hampered by shortage of supply,” he said. “There are plenty of non-farmers waiting in the wings and many seem to have cash available.” On a long-term perspective, the demand for farmland looks likely to increase further around the world due to the finite supply of arable land and population and consumption trends. Analysts also say that rising demand for land for renewable energy sources such as biofuels will compete against food production, further increasing pressure on arable land. Against this backdrop, food prices will stick above their historical average over the medium term for both crop and livestock products as demand grows and production slows, according to a recent report published by the OECD think tank and the UN’s food agency. The twice-yearly RICS rural market survey, which began in 1995, tracks market prices for farmland across England, Wales and Scotland. Taylor Scott International