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Arable land rental rates

Started by ciderdrinker

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  • #1019949

     
    ciderdrinker
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     anyone got an idea of the general price per acre for renting land to grow barley on at the moment? im over in wales

    cheers

    #1019950

     
    Goose Hunter
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    Some went near us lately for 85/ acre without the straw (Scotland) generally reckoned to be a little expensive.

  • #1019951

     
    glasshouseglasshouse
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    some clown has allegedly paid 150/ acre near edinburgh recently.

    #1019952

     
    ciderdrinker
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     150 ouch! Hard to make much return on that!

    #1019953

     
    ciderdrinker
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    So somewhere around the 80-100 mark? What do people think? Any suggestions or ideas most appreciated!

    #1019954

     
    Goose Hunter
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    80

    #1019955

     
    old mcdonald
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    And the value of the land at 80 an acre annual rent is?

    #1019956

     
    Goose Hunter
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    80 plus the straw, whatever value you want to call that. Funnily enough the land renting locally at 85 has just changed hands so its value is established but I dont know what it was. I would guess 3500/acre. More relevant is your production costs, if it is costing you 240? an acre to grow with a malting contract at 180/tonne would you want to be paying any more?

    #1019957

     
    bovrilbovril
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    old mcdonald

    And the value of the land at 80 an acre annual rent is?

    The rent rate bears no relationship to the value of the land. The investment value for a purchaser (which sets the price of land and farms) is in the stability and the anticipated rise in value, plus of course the tax advantages.

    #1019958

     
    Goose Hunter
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    bovril

    [quote user="old mcdonald"]

    And the value of the land at 80 an acre annual rent is?

    The rent rate bears no relationship to the value of the land. The investment value for a purchaser (which sets the price of land and farms) is in the stability and the anticipated rise in value, plus of course the tax advantages.[/quote]

    Then maybe you should clarify your question

    #1019959

     
    old mcdonald
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    OK, what I meant was, what is the value of the land on the open market – without a tenant.

    I acknowledge bovril’s point, I was just trying to get a “feel” for the economics. I am not currently in the UK.

    #1019960

     
    Stuart MeikleStuart Meikle
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    Typically I use a multimplication factor of 15 between rents and sale price, a 6.667% return on capital employed. That puts a rent of GBP80/acre at around GBP1200 an acre!!!!

    From a pure, free-market economics theory, something is wrong if people are factoring in tax advantages to land prices. This and the point about price-rise speculation suggests that not enough has been learnt about the causes of the ecomomic crisis of the last three years. Land is real estate and is little different from housing. Is land stable and secure as an investment, well I guess that depends on what you pay for it and whether you believe markets do not go down as well as up.

    #1019961

     
    glasshouseglasshouse
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    you are dead right there is something wrong, but uk land has always been a speculators paradise and tax dodgers haven. it has zip to do with farming returns.

    #1019962

     
    TeslaCoilsTeslaCoils
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    Historically English land values have risen and fallen with money supply – ie they are inflation proof. On top of this they pay a historic 1 to 1.5% return. So take the rent and muliply by something between 60 and 100 for land value. Land rent has nothing to do with farming returns because letting land is not farming.

    Nothing is wrong, per se. Well, not historically. Most land has been owned by wealthy individual entrepreneurs, the church, historic family or private institutions since the year dot. Nowerdays more likely to be dot com / oil barons or pensions funds than millers, brewers and vicars though. Like all businesses in commodity production, the large have expanded and the small have moved into niche areas. What is wrong is what is wrong with the whole of modern life, not just farming. It is a sign of the times that less people will work the same land, and has been the case since farming began – more from the same utilising less. Frees the labour to be doctors; policemen; shopkeepers; *ahem* bank managers. Not a great list but you get my meaning.

    Land rental values reflect a) supply and b) demand. Nothing else. Lump everything into one or the other category. No need to complicate the basics.

    #1019963

     
    old mcdonald
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    Now then, do I go with Stuart or Tesla on returns? glasshouse is not allowed to read this, but someday I might decide to return to the UK, and purely not to have too close a neighbour, buy a decent house with some land and let the land. glasshouse, I did say you were not to read this. I do not know how much I will have available, and I am not telling anyhow!

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