National View
Average arable and pasture land values across England and Wales saw moderate rises again this quarter. Arable land values reached £9,111/acre in Q3, an increase of £167/acre (or 1.9%) against Q2 2022. Pasture land values rose to £7,447/acre on average in the same period, reflecting quarter-on-quarter growth of £89/acre (or 1.2%).
£9,111
per acre
Average
arable land value in q3
Q-ON-Q
CHANGE
1.9%
4.3%
y-ON-y
CHANGE
£7,447
per acre
Average
PASTURE land value in q3
Q-ON-Q
CHANGE
1.2%
7.0%
y-ON-y
CHANGE
Farmland
Market Update
Q3 2022
Key data and expert commentary
outlining trends in the farmland market
"The agricultural industry has been resilient, and land values reflect that”
FIGURE 5
Ongoing cashflow concerns
Source: Carter Jonas, AHDB, Farmers Weekly, DEFRA, ONS
Inputs
Outputs
Crude Oil
Fertiliser
Red Diesel
Feed Wheat
Oilseed
Rape
Milk
Beef
Pork
CRUDE OIL
Unit
Latest data
Date
Quarterly change
Annual change
£/barrel
83.6
Sept '22
-12.5%
56.2%
Fertiliser
Unit
Latest data
Date
Quarterly change
Annual change
£/tonne
840.9
July '22
7.1%
157.9%
Red Diesel
Unit
Latest data
Date
Quarterly change
Annual change
pence/litres
109.1
Sept '22
-5.7%
62.3%
Feed Wheat
Unit
Latest data
Date
Quarterly change
Annual change
£/tonne
272
Sept' 22
-9.7%
37.7%
oilseed rape
Unit
Latest data
Date
Quarterly change
Annual change
£/tonne
510.8
Sept' 22
-21%
0.2%
MILK
Unit
Latest data
Date
Quarterly change
Annual change
pence/litre
46.7
Aug '22
15.8%
49.4%
BEEF
Unit
Latest data
Date
Quarterly change
Annual change
pence/kg dw
439.2
Sept '22
-0.9%
6.8%
Pork
Unit
Latest data
Date
Quarterly change
Annual change
pence/kg dw
199.2
Sept '22
6.7%
23.9%
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a local overview
East of England
Arable
Pasture
£6,750
£5,750
£10,750
£9,500
£8,750
£6,900
2.9%
0.7%
6.1%
2.2%
Low
£ / acre
Prime
£ / acre
Average
£ / acre
Quarterly %
Annual %
East of England land values
North West
Arable
Low
£ / acre
Prime
£ / acre
£ / acre
Quarterly %
Annual %
Average
£8,000
£6,250
£11,000
£9,500
£9,500
£7,875
0.0%
0.0%
0.0%
12.5%
Pasture
EMAIL DEBORAH
01539 814914
Associate Partner
Deborah Lund
North West land values
Wales
Arable
Low
£ / acre
Prime
£ / acre
£ / acre
Quarterly %
Annual %
Average
£8,250
£4,250
£9,500
£8,500
£8,500
£6,500
0.0%
0.0%
0.0%
8.3%
Pasture
EMAIL Hugh
01248 360417
Partner
Hugh O’Donnell
Wales land values
North East
Arable
Low
£ / acre
Prime
£ / acre
£ / acre
Quarterly %
Annual %
Average
£6,000
£4,250
£8,250
£6,500
£7,000
£5,750
0.0%
0.0%
0.0%
4.5%
Pasture
EMAIL Sam
01423 707801
Associate Partner
Sam Johnson
North East land values
Yorkshire and the Humber
Arable
Low
£ / acre
Prime
£ / acre
£ / acre
Quarterly %
Annual %
Average
£7,750
£5,250
£10,500
£7,000
£8,750
£6,750
0.0%
0.0%
2.9%
3.8%
Pasture
EMAIL Sam
01423 707801
Associate Partner
Sam Johnson
Yorkshire and the
Humber land values
East Midlands
Arable
Low
£ / acre
Prime
£ / acre
£ / acre
Quarterly %
Annual %
Average
£6,250
£6,250
£11,000
£9,000
£8,750
£7,750
2.9%
3.3%
11.5%
14.0%
Pasture
East Midlands land values
West Midlands
Arable
Low
£ / acre
Prime
£ / acre
£ / acre
Quarterly %
Annual %
Average
£9,000
£7,000
£13,000
£10,000
£11,000
10.0%
5.9%
14.6%
12.5%
Pasture
EMAIL Edward
07826 890927
Associate Partner
Edward Beale
West Midlands land values
South East
Arable
Low
£ / acre
Prime
£ / acre
£ / acre
Quarterly %
Annual %
Average
£9,000
£7,600
£11,250
£8,950
£10,000
£8,500
0.0%
0.0%
3.6%
4.9%
Pasture
EMAIL Andrew
07880 084633
Partner
Andrew Chandler
Wales
West Midlands
East Midlands
South west
South east
East of england
Yorkshire & the humber
North east
North west
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EMAIL MARK
01223 346628
Partner
Mark Russell
EMAIL MARK
01223 346628
Partner
Mark Russell
Year-on-year growth has decelerated slightly since last quarter yet continues on its upward trajectory. Average arable land values have risen by 4.3% from Q3 2021. Pasture land values have, on average, grown at a faster pace, increasing by a robust 7.0% over the year. The longer-term trends are remarkably strong. Arable and pasture land values have seen a 10-year annualised growth rate of 2.8% and 3.6% respectively. CPI, as the key indicator of inflation, has grown at a slower annualised rate of 2.5% over the 10-year period, showing that land values have significantly outstripped inflation.
South West
Arable
Low
£ / acre
Prime
£ / acre
£ / acre
Quarterly %
Annual %
Average
£8,500
£5,000
£11,000
£9,000
£9,750
£8,000
0.0%
0.0%
0.0%
0.0%
Pasture
EMAIL David
01823 428591
Partner
David Hebditch
South West land values
EMAIL Andrew
07880 084633
Head of Agency
Andrew Chandler
Source: Carter Jonas, AHDB, Farmers Weekly, DEFRA, ONS
Commodity price trends
Inputs
Outputs
Crude Oil
Fertiliser
Red Diesel
Milk
Beef
Feed Wheat
Oilseed Rape
Pork
CRUDE OIL
Unit
Latest data
Date
Quarterly change
Annual change
£/barrel
83.6
Sept '22
-12.5%
56.2%
Fertiliser
Unit
Latest data
Date
Quarterly change
Annual change
£/tonne
840.9
July '22
7.1%
157.9%
Red Diesel
Unit
Latest data
Date
Quarterly change
Annual change
pence/litres
109.1
Sept '22
-5.7%
62.3%
Feed Wheat
Unit
Latest data
Date
Quarterly change
Annual change
£/tonne
109.1
Sept ‘22
-5.7%
62.3%
OILSEED RAPE
Unit
Latest data
Date
Quarterly change
Annual change
£/tonne
510.8
Sept '22
-21%
0.2%
MILK
Unit
Latest data
Date
Quarterly change
Annual change
pence/litre
46.7
Aug ‘22
15.8%
49.4%
BEEF
Unit
Latest data
Date
Quarterly change
Annual change
pence/kg dw
439.2
MSept ‘22
-0.9%
6.8%
Pork
Unit
Latest data
Date
Quarterly change
Annual change
pence/kg dw
199.2
Sept ‘22
6.7%
23.9%
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WEST MIDLANDS
NORTH EAST
SOUTH WEST
WALES
NORTH WEST
YORKSHIRE & HUMBER
EAST MIDLANDS
EAST OF ENGLAND
SOUTH EAST
2019
EMAIL DEBORAH
CLOSE
01539 814914
Senior Surveyor
Deborah Lund
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North West land values
2019
CLOSE
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North East land values
01423 707801
Associate
Sam Johnson
EMAIL Sam
2019
CLOSE
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Yorkshire & The Humber land values
01423 707801
Associate Partner
Sam Johnson
EMAIL Sam
2019
CLOSE
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Wales land values
EMAIL Hugh
01248 360417
Partner
Hugh O' Donnell
2019
CLOSE
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East Midlands land values
EMAIL mark
01223 346628
Partner
Mark Russell
2019
CLOSE
West Midlands land values
EMAIL michael
07826 890927
Associate
Edward Beale
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2019
CLOSE
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East of England land values
EMAIL mark
01223 346628
Partner
Mark Russell
2019
CLOSE
View on desktop for a full overview
South East land values
07880 084633
Partner
Andrew Chandler
EMAIL Andrew
2019
CLOSE
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South West land values
EMAIL david
01962 833386
Partner
David Hebditch
Landowners, both farming and non-farming, continue to confront significant headwinds as the harsh economic climate continues unabated. There are signs that global commodity markets have started to stabilise, but an equilibrium of agricultural input and output costs is still a long way off. With considerable uncertainty over the economic outlook, volatility will remain in the short term.
New farmland supply in the first three quarters of 2022 was greater than 2021 supply. We are seeing more activity in the market, with increased supply being met by sustained demand. Year-to-date publicly advertised land in September amounted to 65,025 acres. This reflects a 16.6% increase compared to September 2021 (year-to-date). With many sales taking place off-market, this is only a segment rather than reflecting the full scope of availability.
A resilient market
Q3 saw the first decrease in oil prices since Q4 2021, albeit only modest. Crude oil’s 12.5% drop in price (£/barrel) against last quarter could signify a welcome start to stabilising energy costs. However, prices were still 56.2% greater than a year ago and 160.9% greater than two years ago. As crude oil is priced in dollars, a greater concern is the value of sterling, which hit a record low at the end of September. OPEC recorded the cost as $95.3/barrel, 19.0% down on last quarter, indicating that the exchange rate is creating a notable disadvantage for UK buyers. Also, supply concerns have arisen as OPEC+ announced a cut in oil output of 2 million barrels a day. This is expected to cause oil prices to spike again, endangering energy-intensive rural businesses.
Commodity price trends
Sheep
Chicken
£550
£1,800
£1,175
6.8%
17.5%
Hill
£500
£1,500
£1,000
0.0%
0.0%
Hill
£1,650
£2,750
£2,100
0.0%
5.0%
Hill
£10,700
£13,750
£12,250
0.0%
4.3%
Lifestyle
£1,600
£3,700
£2,600
0.0%
4.0%
Hill
£10,500
£15,500
£13,000
0.0%
2.0%
Lifestyle
£10,500
£12,500
£11,500
0.0%
2.2%
Yorkshire Wolds
£13,250
£25,000
£16,750
0.0%
1.5%
Lifestyle
£7,500
£12,000
£9,000
0.0%
0.0%
Silts and Fen
£25,000
£16,000
6.7%
52.4%
Lifestyle
£13,500
£22,000
£16,750
0.0%
1.5%
Lifestyle
£7,500
£12,250
£9,250
2.8%
5.7%
Silts and Fen
£14,000
£30,000
£20,000
0.0%
33.3%
Lifestyle
SHEEP
Unit
Latest data
Date
Quarterly change
Annual change
pence/kg dw
522.4
Sept '22
-20.8%
1.6%
CHICKEN
Unit
Latest data
Date
Quarterly change
Annual change
pence/kg dw
327
Aug '22
5.1%
19.8%
Looking at longer-term performance, average arable land is still 12.6% below its peak of £10,167 in Q2 2016 and pasture land is 4.6% lower than the peak of £7,611 in the same quarter. Nonetheless, although hampered somewhat by moderate falls in value from 2017 to the start of 2021, growth over a 10-year period has been significant. Arable and pasture land values have risen 33.1% and 42.7% respectively since Q1 2012, representing annualised growth of 2.9% for arable land and 3.6% for pasture.
SHEEP
Unit
Latest data
Date
Quarterly change
Annual change
pence/kg dw
522.4
Sept '22
-20.8%
1.6%
CHICKEN
Unit
Latest data
Date
Quarterly change
Annual change
pence/kg dw
327
Aug ‘22
5.1%
19.8%
Ongoing cashflow concerns
EMAIL SOPHIE
020 7493 0685
Senior Research Analyst
Sophie Davidson
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Yet, in the face of vast changes taking place across the farming sector, rocketing input costs and uncertain trade conditions, overall market sentiment has held strong. The agricultural industry has been resilient, and land values reflect that. Where other assets, such as the gold and equities markets, have seen declines in prices, it is encouraging that the rural sector has maintained its position.
FIGURE 2: Annualised Change in Average Land Values in England & Wales to September 2022
FIGURE 3: Annual Publicly Marketed Farmland Supply
However, is it evident that supply is still historically low when compared to longer-term averages. The 5-year average for publicly advertised land at the end of Q3 totals 78,273 acres, 16.9% greater than the level of supply seen from Q1 to Q3 this year. The 10-year average (year-to-date) is even higher at 99,960 acres, 34.9% higher than the September 2022 cumulative supply figure.
It is too early to tell whether the pressure of interest rate rises will prompt land sales. However, much of the market is still sustained by rollover funds and so capital values are like to be less exposed to the increasingly expensive debt market in the way other markets are. With an ever-expanding pool of motivated buyers, the market remains tight.
The estates and country houses markets continue to achieve elevated prices, with prime sites in attractive locations particularly popular. An increase in prime land values indicates that the allure of the countryside seen in the last two years has not eased. Prime lifestyle land values have risen particularly steeply, and are 22.7% up on Q3 2021. These opportunities are typically sought after by high-net-worth individuals for their associated residential offering.
Demand for bare and/or unproductive land, especially for natural capital purposes, remains at all levels. In the near-term, we can expect land requirements for ‘green’ schemes to continue to build momentum. The natural capital market as a monetised asset class is developing and new, non-agricultural players are emerging, notably developers who are seeking to offset biodiversity loss or carbon. With mandatory Biodiversity Net Gain (BNG) for development projects now only a year away, this trend will only accelerate.
The government faces calls from the farming community to commit to confronting the problems facing UK agriculture. Announced at the end of September, the ‘mini budget’ pledged a commitment to agricultural productivity growth and competitiveness, and referenced plans to review rural policy frameworks. More detailed information, expected later this year, may serve to boost optimism in the market.
Average Land Values in
England & Wales
FIGURE 2
Annualised Change in
Average Land Values in
England & Wales to September 2022
FIGURE 1
Average Land Values in
England & Wales
FIGURE 2
Annualised Change in
Average Land Values in
England & Wales to June 2022
FIGURE 1
FIGURE 1: Average Land Values in England and Wales
Of all commodities tracked by Carter Jonas, fertiliser prices have seen the steepest growth. Despite decreasing in April and May, average prices rose by 11.0% from June to July, ending the month at a historic high of £840.90/tonne for UK produced ammonium nitrate. Domestic and imported ammonium nitrate fertilisers have seen sizable year-on-year increases of 157.9% and 154.7% respectively. With supply low, is it expected that there will be no new aggregate price reported for UK-manufactured AN any time soon (Farmer’s Weekly). However, The Andersons Centre reported a domestic spot price of £890/tonne towards the end of September and imported prices stood at £870/tonne (AHDB), suggesting prices have increased even further.
Fears over prices were intensified with the announcement that CF Fertilisers UK has halted ammonia production at its Billingham site. Many continue to consider alternatives to artificial fertiliser, whether that is, for instance, starting the transition to organic farming, switching to urea or using cover crops as an alternative source of nitrogen.
It is evident that a ‘cost of farming squeeze’ is still taking place. In contrast to rocketing input prices, farming outputs have only seen modest rises which have not consistently kept pace with the rate of inflation, putting sustained pressure on profit margins. Some output prices have declined sharply across the quarter, namely feed wheat (-9.7%), oilseed rape (-21.0%) and sheep
(-20.8%).
Price increases have influenced farmers’ decisions on what food they produce and in what quantity. Dairy herds, for instance, have seen a 7.1% decrease in population in England in the five years to 2022, reflecting an annualised change of -1.5% (Defra). This long-term decline has been attributed to high running costs and mounting expenses. We can expect milk prices to continue to push upwards in the face of declining supply.
There has also been a substantial decrease in the number of breeding pigs which, according to data from Defra, has seen a -18.4% year-on-year change. This is unsurprising considering the profit margins (or lack of) reported by pig farmers. Where the price of pork was 199.2 pence/kg in September, the cost of production was last estimated at 223 pence/kg (August, AHDB), generating losses for farmers.
South East land values
The geopolitical landscape remains challenging, as the shockwaves of the war in Ukraine continue to be felt across commodity markets and food supply chains. Immense short-term disruption is being felt by farmers who are tackling spiralling agricultural input prices. In the near-term, the conflict may provide a driver for higher domestic prices, but this has not yet balanced out the rising costs of production.
Sheep
Chicken
Q3 saw the first decrease in oil prices since Q4 2021, albeit only modest. Crude oil’s 12.5% drop in price (£/barrel) against last quarter could signify a welcome start to stabilising energy costs. However, prices were still 56.2% greater than a year ago and 160.9% greater than two years ago. As crude oil is priced in dollars, a greater concern is the value of sterling, which hit a record low at the end of September. OPEC recorded the cost as $95.3/barrel, 19.0% down on last quarter, indicating that the exchange rate is creating a notable disadvantage for UK buyers. Also, supply concerns have arisen as OPEC+ announced a cut in oil output of 2 million barrels a day. This is expected to cause oil prices to spike again, endangering energy-intensive rural businesses.
Of all commodities tracked by Carter Jonas, fertiliser prices have seen the steepest growth. Despite decreasing in April and May, average prices rose by 11.0% from June to July, ending the month at a historic high of £840.90/tonne for UK produced ammonium nitrate. Domestic and imported ammonium nitrate fertilisers have seen sizable year-on-year increases of 157.9% and 154.7% respectively. With supply low, is it expected that there will be no new aggregate price reported for UK-manufactured AN any time soon (Farmer’s Weekly). However, The Andersons Centre reported a domestic spot price of £890/tonne towards the end of September and imported prices stood at £870/tonne (AHDB), suggesting prices have increased even further.
Fears over prices were intensified with the announcement that CF Fertilisers UK has halted ammonia production at its Billingham site. Many continue to consider alternatives to artificial fertiliser, whether that is, for instance, starting the transition to organic farming, switching to urea or using cover crops as an alternative source of nitrogen.
It is evident that a ‘cost of farming squeeze’ is still taking place. In contrast to rocketing input prices, farming outputs have only seen modest rises which have not consistently kept pace with the rate of inflation, putting sustained pressure on profit margins. Some output prices have declined sharply across the quarter, namely feed wheat (-9.7%), oilseed rape (-21.0%) and sheep (-20.8%).
Carter Jonas continues to monitor the changing nature of the farmland market and the influences on land values in England and Wales.
FIGURE 4: Cumulative Publicly Marketed Farmland Supply
FIGURE 3: Year-to-Date Publicly Marketed Farmland Supply
Cumulative Publicly
Marketed Farmland Supply
FIGURE 4
Year-to-Date Publicly
Marketed Farmland Supply
FIGURE 3
Year-to-Date Publicly
Marketed Farmland Supply
FIGURE 3
Cumulative Publicly
Marketed Farmland Supply
FIGURE 4
Price increases have influenced farmers’ decisions on what food they produce and in what quantity. Dairy herds, for instance, have seen a 7.1% decrease in population in England in the five years to 2022, reflecting an annualised change of -1.5% (Defra). This long-term decline has been attributed to high running costs and mounting expenses. We can expect milk prices to continue to push upwards in the face of declining supply.
There has also been a substantial decrease in the number of breeding pigs which, according to data from Defra, has seen a -18.4% year-on-year change. This is unsurprising considering the profit margins (or lack of) reported by pig farmers. Where the price of pork was 199.2 pence/kg in September, the cost of production was last estimated at 223 pence/kg (August, AHDB), generating losses for farmers.
Conversely, and despite a -64.8% five-year difference in land coverage, hectares farmed for oilseed crops have increased by 14.0% year-on-year. This is likely to be a reaction to the sharp rise in global prices with Russia and Ukraine, who account for 10% of global oilseed production (AHDB), being almost wholly removed from the market. Otherwise, the stock and hectarage of other cereals and livestock have seen only modest changes, such as a 1.6% decline in poultry numbers and 2.0% growth in the total number of sheep and lambs.
A weaker sterling is likely to bolster domestic prices as British exports become more attractive and UK product becomes more competitive against imports. However, the exchange rate will also continue to push up the cost for many imported inputs, such as machinery and fertiliser, placing further pressure on profit margins. Likewise, the surge in inflation has given prominence to the question of domestic consumer affordability and demand for quality British produce. This could lead to a drop in demand for products such as red meat, for instance.
With inflation and input costs set to remain elevated for some time, interest rates certain to rise further, and historically weak consumer confidence, the challenges facing the UK economy are far from being resolved. This will mean ongoing profitability concerns for UK farmers.
£12,000
£9,000
Yet, in the face of vast changes taking place across the farming sector, rocketing input costs and uncertain trade conditions, overall market sentiment has held strong. The agricultural industry has been resilient, and land values reflect that. Where other assets, such as the gold and equities markets, have seen declines in prices, it is encouraging that the rural sector has maintained its position.
Conversely, and despite a -64.8% five-year difference in land coverage, hectares farmed for oilseed crops have increased by 14.0% year-on-year. This is likely to be a reaction to the sharp rise in global prices with Russia and Ukraine, who account for 10% of global oilseed production (AHDB), being almost wholly removed from the market. Otherwise, the stock and hectarage of other cereals and livestock have seen only modest changes, such as a 1.6% decline in poultry numbers and 2.0% growth in the total number of sheep and lambs.
A weaker sterling is likely to bolster domestic prices as British exports become more attractive and UK product becomes more competitive against imports. However, the exchange rate will also continue to push up the cost for many imported inputs, such as machinery and fertiliser, placing further pressure on profit margins. Likewise, the surge in inflation has given prominence to the question of domestic consumer affordability and demand for quality British produce. This could lead to a drop in demand for products such as red meat, for instance.
With inflation and input costs set to remain elevated for some time, interest rates certain to rise further, and historically weak consumer confidence, the challenges facing the UK economy are far from being resolved. This will mean ongoing profitability concerns for UK farmers.