Land prices see strong rise despite lagging UK

DESPITE most crop prices hovering around the cost of production, the demand for top arable land is still pushing upwards - and to continue the contradiction, demand for livestock farms is easing despite this sector being in relatively rosy times.

These are the headline statistics emerging from farm sales throughout the UK in the first six months of this year according to a survey of farmland conducted by the Royal Institute of Chartered Surveyors.

Interest in Scotland fell behind other parts of the country, but bare land prices rose 16 per cent for arable land - the average price now stands at 13,591 per hectare. For grassland farms the increase is 11 per cent, with the current average price of 6,178.

Chartered surveyors expect farmland prices to continue rising over the next 12 months due to increased demand. However, it is the commercial farmland sector where they expect to see the sharpest price rises.

RICS Scotland spokesman Neil Freshwater said there was still demand for farmland in Scotland, though not to the same extent as elsewhere in the UK. He added: "We are seeing demand particularly coming from commercial farmers who are keen to expand their production."

Mark Mitchell, of agents Bell Ingram in Perth, said that the willingness of the banks to lend to the agricultural sector had helped maintain land values.

He added: "Quality still rises to the top, though an active forestry market has placed a firm bottom to the market"