Survey reveals arable farmers’ expansion plans

A large number of arable farmers have plans to invest in more land or renewable energy projects in the near future, according to a survey by Barclays Bank at Cereals 2011.

Of the 160 farmers questioned, responsible for over 52,000ha, 55% planned to expand the area farmed over the next two years, up from 52% last year, while 42% expected their area to stay the same.

Almost half (48%) of those who expected to increase farmed area planned to do so by outright purchase, while the remainder would consider any combination of purchase, farm business tenancy or joint venture.

The survey also found that 56% of farmers would consider investing in some form of renewable energy enterprise in the next two years, up from 43% last year. Around one-third were considering wind power and another third were thinking about solar.

Estimated renewable energy investments generally ranged from £25,000 to £100,000, with just one expecting to invest over £1m. Last year the majority were looking at investing £100,000 to £150,000 and four over £1m.

“Visitors to the Cereals Event are more likely than average to be thinking about active management of their businesses, including expansion and renewable energy projects,” Martin Redfearn, head of agriculture at Barclays, said.

“However, they will be competing hard with each other for the limited area of land likely to be available for sale or rent in the near future. Careful consideration of the cost of expansion of farmed area and investments in renewables, and the pressure it will put on the underlying business, will be a pre-requisite for all.”

Demand for land was likely to keep upward pressure on prices, and while this would provide a “welcome boost” to a bank’s security for lending, Mr Redfearn stressed that ability to service debt was a more important consideration when assessing lending propositions.