Soaring price of farming land in South West
Farmland prices in the South West have reached a record high driven by increased demand and lack of available land.
The average price per acre for farmland in the South West increased to £6,875 during the second half of 2012, according to statistics from the latest Royal Institute of Chartered Surveyors market survey.
While house prices have been stagnating in recent years, it means the price of land in Devon and Cornwall is more than double the £3,000 which was being paid per acre a decade ago.
The RICS said buyers were discriminating in favour of large, top-quality plots neighbouring their existing holdings with as small a residential component as possible.
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Alex Rew, of Stags in Exeter, the RICS rural spokesman for the South West, said: "The 2012 market was characterised by few farms being offered for sale – with commercial farms in particularly short supply, while at the same time being the most sought after.
"In 2012, bare land sold by Stags saw an 11% increase compared with the previous year, with average land values up to £6,780 per acre.
"Particular hotspots included East Devon, where 39 acres of arable land sold at auction for £11,297 per acre, and Mid Devon, where 24 acres of arable ground made £11,695 per acre, also by auction.
"These figures must be read with some caution – as prices were very location specific."
Surveyors said the majority of demand was from commercial farmers, keen to expand production to capitalise on high agricultural commodity prices.
But the RICS stressed there was considerable price differentiation in farmland, even locally.
Smaller plots with lower soil quality or with farmhouses or cottages were attracting much less interest and achieving lower average per acre prices.
The National Farmers' Union in the region said there were positives and negatives for the industry.
"It is a double-edged sword," South West spokesman David George said.
"For any farmer who is lucky enough to own their own land it is an asset which is increasing in value, which can be borrowed against to help their financial position.
"On the other hand it makes it very difficult for those entering the profession to get their foot on the ladder.
"For tenant farmers, rents are partly based on the value of land which could make things more difficult during rent negotiations."
However Mr George said land prices could fall after a difficult year for the industry with a combination of bad weather hitting production and high costs.
Provisional Department for Environment, Food and Rural Affairs (Defra) figures for farm incomes for 2012/13 showed dairy sector profits estimated to be down by approximately 42 per cent while the livestock sector fared even worse with profits down 44 per cent.
Surprisingly, the least badly affected have been arable farmers, who despite the wet weather, difficult harvest, low yields and poor quality crop, have only seen incomes fall by an estimated 11 per cent in England.
Many surveyors, however, expect prices to continue to increase over the next 12 months because of the lack of available land in the region.
James Stephen, of Carter Jonas and spokesman for the RICS in Somerset, said: "Good-quality land capable of arable production remains in strong demand and prices are expected to hold firm.
"But following the very wet period we have experienced since April 2012, livestock farmers in particular have seen their profits fall sharply and this has impacted on the demand for pasture.
"Some land, on the Somerset Levels in particular, has also been affected by prolonged periods of flooding which will impose a downward pressure on land values in the worst-affected areas."