Rural Newsletter

9 January 2012

As we celebrate the festive season and look back on 2011, there is clear evidence Scottish agriculture has weathered the general economic storm better than many sectors.

 

As Scotland’s largest rural property consultancy, we have witnessed very encouraging activity by and for rural businesses.

In terms of land sales, demand for prime and second class arable land in the east of the country from active arable farmers wanting to increase the size of their business, together with strong agricultural commodity prices, has fuelled demand for farmland and the consequence of fierce competition between farmers and cash rich investors has resulted in arable land selling swiftly during the first half of 2011.

Our national farm sales office in Stirling has co-ordinated the sale of 29 farms through our network of regional offices covering in excess of 12,600 acres during the year and have other units under offer and available for sale.

We have also sold estates extending to over 47,700 acres and have purchased farms and estates extending to over 12,000 acres on behalf of clients this year.

An indication of values achieved in the year so far is shown below:

  • Prime Arable £6,500 / acre plus
  • Secondary Arable £4,500 - £6,500 / acre
  • Rotational Grass £2,500 - £4,000 / acre
  • Permanent Pasture £1,500 - £2,500 / acre
  • Hill / Rough Grazing £150 - £1,250 / acre

 

Robert Taylor, the firm’s head AMC (Agricultural Mortgage Corporation) agent, who has spent the best part of his 20-year working life in the rural sector as a farmer, chartered surveyor and livestock auctioneer, has reported an unprecedented level of enquiries and applications for all aspects of agricultural business finance and throughout 2011.

Robert says: “As a firm we offer a specialist service through our dedicated team of AMC agents located throughout Scotland, who are all chartered surveyors with deep farming industry knowledge. Loans are tailored to the specific needs of rural land based business, offering unrivalled benefits and, most importantly, allowing people to get on and run their companies.”

In terms of farming businesses operations, very tough harvest conditions prevailed but crop yields were high and commodity prices were at their highest for at least 5 years, (around £200/tonne SB and WW). Fat cattle and sheep prices have also been strong.

Single Farm Payment is up 0.8% due to the exchange rate being favourable in September. 75% of farmers received payments in the first 15 days of December.

Changes to these payments are to be phased in from 2014 - 2019 with a historic element which will soften the change for businesses with higher value entitlements. Farming business will be alert to a possible gap in funding on SRDP the longer it takes the EU ministers to get an agreed start date for any CAP reform changes.
Meanwhile, farm businesses continue to use land sites to diversify into renewables supported by cash flow security from Feed-In Tariffs and the Renewable Heat Incentive scheme.

Regarding farm rents, the general picture is one of sensible farm rents being agreed in May and November between landlords and tenants without any reference to Moonzie case or its appeal. There is also strong demand for short term let land for cereals and specialist cropping with significant rental growth over the last 12 months. Open bare land cropping lets are between £100 and £200 per acre.

Rural cottage and house letting continues to hold up very well indeed - rents from £250-£1500 per month are commonplace and demand continues to be strong, from those not able to access or ready to spend capital on purchase.

All at CKD Galbraith offer their compliments of the season and wish you well for 2012.

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