Keep not cheap in right location
ANOTHER auction has seen farmers paying more for grasskeep than a year ago.
At David James and Partners annual offering near Bristol, the average at £65/acre was up £2. "There must have been 150 people in the auction room," says the firms Richard Nancekivell.
The top price was £100/acre, paid for a 20 acre-block on the edge of a village. "Two local farmers were keen to have it."
It highlights, he says, the importance of location in determining the money paid. "If a farmer is offered keep 20 miles down the road for half the price that he can get it on his doorstep, hell probably still go for land next door."
People are keen to get keep – partly spurred on by the knowledge that its only a short-term commitment, says Mr Nancekivell. "They can always make a completely different decision next year based on a completely different set of circumstances."
But values are likely to slip on 12 months ago, predicts Jeremy Bell of JH Palmer & Sons, gearing up for the Apr 6 auction at Highbridge.
"This year could be the bottom of the barrel," he says, with averages in 1998, 1997 and 1996 of £60, £75 and £100/acre respectively. "This spring could be £50/acre."
The drop directly reflects the decline in farming profitability. More is also on offer at this auction, with about 1300 acres up for grabs. "The equilibrium between supply and demand has tipped."
By next spring values should be on the up, reckons Mr Bell, as the Agenda 2000 proposals prompt farmers to seek extra land to take advantage of the new subsidy levels.
Meanwhile deals already done by private treaty this spring have mostly been at similar levels to 12 months ago, says Mr Bell. "But this is not a proper reflection of market value. The proper barometer is auction levels."
Location is the key determinant of price. "You can see the same sort of land in two different places make a completely different price."
To make the top money it also needs to have good access and be in an area where farmers are expanding. "If there isnt this, it could make half the money. Grass quality is not the prime concern," adds Mr Bell.
Range of values
Andrew Wallace of Wright-Manley says values had ranged from £44 to £120/acre by the end of last week, with the spread reflecting quality and location.
"People will pay a premium for something that is within a couple of miles of them that can be mown, grazed and is well fenced, watered and in good heart."