LAND PRICES and the amount of land in the tenanted sector have started to decline as the implications of CAP reform become clearer.
According to land agent Strutt & Parker’s latest arable land index, the price of arable soil fell by about 5% to £2858/acre during the six months ending in March.
The slide follows nine months of strong growth when values rose from £2353/acre to over £3100/acre.
Ian Hepburn, the firm’s head of farm agency, said: “We believe this is due to an increase in land availability towards the end of 2004 and a greater amount entering the market in the first quarter of 2005.
“It appears that the imbalance between supply and demand that contributed so strongly to higher land values last year may be weakening.”
The amount of let land has also fallen for the first time since farm business tenancies were introduced in 1995, according to the Central Association of Agricultural Valuers’ Jeremy Moody.
He said the amount of land in the organisation’s 2004 tenanted farms survey was down 1214ha (3000 acres) on the previous year, compared to recent growth of 14,164ha (35,000 acres) each year.
Landowners taking land back in hand to ensure they could establish entitlements to the single farm payment were to blame, said Mr Moody.
But Tenant Farmers Association chief executive George Dunn said “The SFP is not meltdown for the tenanted sector.”
He expected landlords to start re-letting land from Lady Day 2006 once the initial 10-month occupation period for the SFP had passed.