Farming: Land grab has big impact on hill and sheep farmers

The huge increase in the large-scale acquisition of land by institutional investors, financial institutions and others speculating in the natural capital and carbon offset markets is likely to have long term implications for hill farming communities and the sheep farming industry.
Professor Mark ReedProfessor Mark Reed
Professor Mark Reed

And a report published this week by Scotland’s rural science organisation, SEFARI, found that the institutional land grab which was driving values beyond the farming industry’s pockets could also freeze out new entrants to the industry.

Crucially, it also concluded that without checks on buyers, it was possible for highly polluting industries to use such purchases to reach net zero via offsetting rather than reducing their emissions at source - undermining the integrity of both markets and global political agreements.

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Drawn up by the SRUC, the report highlighted the fact that while heated interest in land sales offered opportunities it also presented a number of associated risks which would need to be managed.

The report found that more than 40 per cent of farmland was bought by investors and amenity buyers over the past five years. Natural capital buyers were also increasingly important in the estates market, with £112 million invested in Scottish estates in 2020 – an increase of 55 per cent on the ten-year annual investment.

In addition, increased demand from institutional investors and financial institutions led to average sale prices for commercial forestry land exceeding valuations by around 50 per cent in 2021.

The report, co-authored by Professor Mark Reed - Co-Director of SRUC’s Thriving Natural Capital Challenge Centre outlined the risks these trends could create for markets, land managers and rural communities.

The report followed an evidence review and a roundtable event with more than 60 experts from policy, investment, third sector, research, land management and rural communities.

Among the risks identified by the project – which was also backed by the Scottish Land Commission - was that without proper buyer checks, it would allow highly polluting industries to ise offsetting to buy their way out of trouble rather than reducing their emissions.

And it concluded that while land value increases provided benefits for existing owners, it could exclude new entrants to farming, re-concentrate landownership and limit access to land by rural communities.

The options for reducing the risks and enhancing the positive impacts of natural capital investment include developing guidance on the rights and responsibilities for investors entering the UK market, supporting alternative landowner models such as community ownership and addressing barriers to tenants engaging in ecosystem markets.

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“Interest in natural capital and ecosystem markets is driving rapid and significant change in the land use sector across the UK, but these changes are layered on top of - and often symptomatic of - long term and systemic issues in land markets, such as concentration of landownership, and other market drivers, such as timber prices,” said Professor Reid.

“It is important that effective and well-aligned market-based and public-support mechanisms are designed to tackle existing structural barriers, avoid policy conflicts and ensure land use transitions are viable across a wide range of land managers and holding types and sizes.”

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