Why farmers are willing to buy again

After a few years of poor commodity prices, foot-and-mouth disease and the uncertainty surrounding the introduction of the Single Payment Scheme, there is a good deal more optimism among farming businesses, writes Jonathan Armitage.

This has implications for both the supply and demand for farmland and, while our figures show half of farmland is still being sold to non-farmers, farmer buyers are a significant force in the market again.

Commodity prices, particularly for combinable crops, remain firm, with feed wheat currently trading at about £90/t compared with £65 a year ago and, despite increases in input prices, there are at last some profits to be made.

Grain traders are still fairly bullish about prices for next year, particularly as a result of the planned expansion in the biofuels sector. With exports back up and running, beef producers are also seeing good prices.

There seems to be a certain amount of evidence that the improved trading conditions have resulted in many farmers putting off some hard decisions about land sales or restructuring.

This means the availability of farmland in the market nationally has remained relatively constant over the past couple of years, when many forecasters were predicting a rush of land on to the market after the 2005 introduction of CAP reforms.

At the same time there are an increasing number of farmers looking to expand their business and, combined with a continued interest from outside farming, the demand for farmland remains high.

Of course, not all sectors of the industry are as buoyant and the dairy sector remains in difficulty with pressure on prices and a continued exodus of farmers from the sector. This has certainly contributed to some significant regional variations in land prices particularly for pasture land.

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