As we move into the last quarter of the year, we are not predicting a change to the recent pattern of farmland supply across Great Britain and we expect the volume of acres marketed in 2014 to be similar to recent years.
Next year there are a few factors that might increase supply and affect ongoing growth in values.
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However, moving into 2015 there are a few factors that might increase supply and affect ongoing growth in values. At a national level we are expecting some growth in average values, but this will be more muted than in 2014, with a continued diversity in the ranges of values achieved. Clearly an understanding of local market conditions will be critical to both buyer and seller to ensure realistic expectations.
The factors include:
• Pressure on farm incomes and cash flows with the significant weakening commodity prices, a 7% exchange rate hit on subsidies and the prospects of interest rate rises.
• Uncertainty around the outcome of the General Election and more especially in Scotland over Land Reforms and any further fall out from the Independence Referendum.
• Compliance with the new CAP ‘Greening’ rules may impact on cropping choice and farm business incomes.
• In Scotland and Wales the shift from historic based payments to the new regional CAP payment scheme is likely to create some distortion in incomes with a wide range between the winners and losers. The losers will principally be intensive livestock producers and especially those in the lower payment areas. In addition buyers of high value entitlements activated in the Less Favoured Area (LFA) will also suffer a capital as well as an income loss.
• In Scotland, the new ‘active farmer’ exemptions from 2015 include non-agricultural sporting estates. Unless these estates can prove the necessary level of agricultural activity they may lose this income stream.
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