2023 has been a strong year for Stephensons Rural and Boulton & Cooper in terms... Read more
Lump Sum Exit Scheme – Farmland Impact
2022 has seen a steady flow of farmland being offered for sale although not at levels indicative of an exodus. The recently published figures for the uptake of the Lump Sum Exit Scheme show that 2,706 applications have been received by DEFRA. This figure equates to 3% of total BPS claimants and is likely to see numbers reduce further once eligibility checks are carried out.
Interestingly, the majority of applications are from those farming less than 50 acres and so we are unlikely to see a flurry of sales as businesses are wound up.
As such, given the current financial climate and precarious future ELMS scheme, I do not expect land values to drop but that the farmland market will see values across the board plateau, while demand for the best quality arable land will continue to generate strong interest from competing neighbours.
With prices for Grade 1 arable land regularly breaching £15,000/acre, an argument could be made that rapidly rising borrowing costs will hamper demand. However, with wheat futures strengthening again into 2024, unless the Ukraine conflict ends before summer 2023, it is likely that high commodity prices will remain, especially given the increasing levels of inflation at a global level.
We have seen the bottom end of the land market being heavily subsidised by lifestyle and ‘Green’ buyers and whilst demand has cooled, the move towards regenerative farming practices, and the short-term yield penalty this brings, is likely to underpin values as commodities remain in demand.
Soil health and water quality appear to be the main focus of the new subsidy systems being offered under the Sustainable Farming Incentive (SFI), with the expectation that this will reduce future demand for bagged fertiliser. Are we likely to see a move back towards mixed farming enterprises if fertiliser continues to hover around the £800/tonne mark?
The impact of the Lump Sum Exit Scheme appears to be muted at best. Should we be surprised?
Stewart Hamilton MA (Hons) MRICS
Tel: 07894 317369
Review of 2023
YAMS – WEDNESDAY 7TH FEBRUARY 2024 – A MESSAGE TO ALL OUR CLIENTS
As YAMS celebrates its 10th anniversary, the team at Stephensons Rural look forward to welcoming... Read more