After a number of years where the price of farm land has outstripped almost every other investment, a leading estate agent has advised farmers that if they are not entirely convinced their future lies in farming, now might be a good time to exit the industry.
Charles Dudgeon of Savills said this was not to say he did not think the future still looked pretty good, albeit with the odd up and down, it was more a reflection on how dramatically land values had risen in recent years.
Putting a farm on the market might not even mean stopping farming, he said, as many of those who are now investing in land do not wish to farm themselves and want someone to do it for them.
Speaking in Edinburgh, Dudgeon added that the big interest in buying was in the very best arable land as it provided options not possible for those buying all grass livestock farms.
But he warned that “there was arable land and arable land”, with some estate agents possibly “overselling” properties where the soil may be hungry or where the land may not be suitable for all crops. There was also an over-optimistic view of the market from some sellers, who saw a figure of around £7,500 per acre as a starting point.
“In some cases we have achieved well in excess of that, especially where neighbours are concerned, but that does not mean every arable farm is worth that amount,” he said. “Some sellers are too bullish.”
The other category of land where there is currently strong interest is in hill ground where there are several price-drivers including options for renewable energy projects.
After a lull in interest in wind energy, Dudgeon said there was now renewed activity in this field. The potential for hydro power was also a major factor in the sale of some properties in the Highlands.
The government’s oft-stated target of increasing the acreage of land under trees was also helping put a firm base in the market for properties in the hills, he said.
When asked about the effect of the forthcoming referendum, Dudgeon said he did not think independence itself would affect land values as markets were more important to farmers than political boundaries.
“Irrespective of who is in charge, farmers will come to where they can farm best,” he said.
However, he was extremely concerned that a move to independence could mean a disruption to single farm payments. “If we come out of Europe I cannot believe we will get back in within a few months, it has taken years of negotiations for other countries to get access.”
He said he had not seen any definitive answer to that issue and that it had to be a major concern for the farming community. “Uncertainty kills the market,” he stated unequivocally.
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