Sitting on a fortune- local authority farm estates rise in value

blessed_plot07:11 Monday 4th August 2014
BBC Radio Cambridgeshire

[P]AUL STAINTON: Let’s move to farmland and the cost of it in Cambridgeshire. Apparently it costs more than ever before. The price of an acre of English farmland has risen past £10,000 for the first time ever, according to research from a national property consultancy. So is this good news for farmers, or does it limit those who want to expand? And what does it mean for those who want to enter the farm industry? Is the rising cost of land pricing out the next generation of farmers? Well Jason Beedell is Head of Research at Smiths Gore, who are rural property advisers. They have offices in Peterborough and Newmarket and elsewhere. Jason, good morning. What’s happening then to the price of farmland in Cambridgeshire? Why is it rising so steeply?
JASON BEEDELL: It’s been rising steeply all across the country, and for quite a while now.
PAUL STAINTON: So it’s not just here?
JASON BEEDELL: No no. No. For the last ten years it’s been going up, so it’s really gone up 100% over the last ten years. And that’s purely because of the demand. It’s been a relatively profitable period for farming, and so those farmers who’ve got farms and land already want to expand their businesses, so they’ve been buying.
PAUL STAINTON: We keep being told it’s difficult for farmers out there.
JASON BEEDELL: It is for some, and for some sectors it’s terribly difficult. So if you’re a dairy farmer for example, and I know there are not too many Cambridgeshire dairy farmers, but if you’re a dairy farmer, only the top 25/30% are making a profit. But for arable farmers so much more important here, it has been a good decade.
PAUL STAINTON: Right. So it’s just farmers that are wanting to expand. Is that what’s causing the spike?
JASON BEEDELL: Well most land is bought by existing farmers, and like you say it’s very difficult, very expensive for new people to buy land. But it’s also bought by investors, people who want to put their money somewhere safe. And farm land is really seen as a safe investment. And it’s also bought by just normal people like you and me, who’ve got a little bit of money, and want their patch of England. So there are three types of buyers really.
PAUL STAINTON: It could be a good investment.
JASON BEEDELL: It’s a very good investment. hardly any investments have done better during the recession, over the past ten years.
PAUL STAINTON: Well I can’t think of anywhere where you’ve got 100% return on your money.
JASON BEEDELL: In ten years?
JASON BEEDELL: No no. And there are some really good inheritance tax benefits as well, if you’re an individual. So there are lots of good things about it. And people seem to love farming, not just the people who do it at the moment, but a lot of people want to get into it.
PAUL STAINTON: And Bob Lawrence is with us as well, from the Cambridgeshire National Farmers Union. Bob, morning.
BOB LAWRENCE: Good morning to you.
PAUL STAINTON: So you’ve never had it so good.

BOB LAWRENCE: That’s one way of putting it. Yes. But I think probably in Cambridgeshire we’re in a really good position, in that the quality, it’s all about the quality of land really. Over 50% of our land in Cambridgeshire is Grade I and II out of IV, which means it’s very productive. And really for the best land in Cambridgeshire, £10,000 is probably a bit low, because it will all depend on the type of land, access to irrigation, buildings and whether it has a house on it. So yes, you’re previous speaker highlighted it really, it’s down to investment and a safe store for money.
PAUL STAINTON: Is it all good news, or are there some negatives with the price of land?
BOB LAWRENCE: If you’re an owner of land it’s obviously good news. If you’re attempting to purchase land it’s probably not so good news. But then you do hold your investment. If you’re a young person coming into farming, again in Cambridgeshire it’s not necessarily bad news, because the Cambridgeshire County Council with its farm estate, which is the largest in the UK, has a large block of land with which it encourages young farmers to get on that first rung of the ladder. So there is till a route into farming for young people.
PAUL STAINTON: As you mentioned, Cambridgeshire County Council has the largest amount of council-owned farmland. Is it time to think about selling it perhaps, if it’s over £10,000 an acre. The LibDems have mentioned this, haven’t they? It could plug a very big hole, couldn’t it, if we sold off some of our land?
BOB LAWRENCE: Well Cambridgeshire County Council has actually already sold some of its land. And in the last eighteen months, two years, as I’m sure you’re well aware of, Peterborough Council also are thinking of diversifying part of their farm estate.
PAUL STAINTON: Diversifying is an interesting word. Yes. carry on.
BOB LAWRENCE: (LAUGHS) Cambridgeshire County Council has been selling small pockets of land in the right places, but it’s still really encouraging for young farmers that there’s a tenancy structure into farming.
PAUL STAINTON: Jason, is now a good time to sell if you’re an investor, if you’ve got, like Cambridgeshire County Council … say it was me, I’d got 50 acres, am I going to get any better price than I’m going to get now? Stick of twist is what I’m asking.
JASON BEADLE: I would stick for a little while. I don’t think it’s the top of the market. It could still go up a little bit more, and particularly as a researcher you would expect me to say something like this but we’re always asked what land will do. And rather than just gaze at a crystal ball we’ve built a statistical model to try and predict it.
PAUL STAINTON: I’d expect no less.
JASON BEEDELL: Exactly. And the model is still pointing upwards. So it might be time to stick, but in a couple of years time, have another think.
PAUL STAINTON: OK. Bob, have you got all the crops in?
BOB LAWRENCE: Not yet. No. We’re still on with harvest. A long way to go yet. Just to remember with farming, if it’s an outside investor, investing in Cambridgeshire farmland, farmers still have the opportunity to farm it. Because the outside investor can’t farm it. So the neighbouring farmer can still farm that land.
PAUL STAINTON: OK Bob, thank you for coming on this morning. I know you’re a busy fellow. Bob Lawrence, County Chairman of the NFU. Jason thank you for coming in this morning. Appreciate that. Jason Beedell Head of Research at Smiths Gore. So it’s going to get higher, the cost of farmland in Cambridgeshire is going up and up and up. Not time to sell right now.