National View
Average arable land values across England and Wales rose to £8,994 per acre in Q2 2022, a steady increase of 0.6% against Q1 2022. When compared to Q2 2021, values have seen an increase of 5.0%. Average pasture land values have grown slightly faster over the quarter, rising by 1.3% to £7,358 per acre in Q2. This reflects a strong year-on-year increase of 7.9%.
£8,944
per acre
Average
arable land value in q2
Q-ON-Q
CHANGE
0.6%
5.0%
y-ON-y
CHANGE
£7,358
per acre
Average
PASTURE land value in q2
Q-ON-Q
CHANGE
1.3%
7.9%
y-ON-y
CHANGE
Farmland
Market Update
Q2 2022
Key data and
expert commentary outlining trends in the farmland market
"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.”
FIGURE 4
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
91.5
May ‘22
31.8%%
92.5%%
Fertiliser
Unit
Latest data
Date
Quarterly change
Annual change
£/tonne
715.7
May ‘22
10.2%
151.8%
Red Diesel
Unit
Latest data
Date
Quarterly change
Annual change
pence/litres
106.9
May '22
35.1%
71.6%
Feed Wheat
Unit
Latest data
Date
Quarterly change
Annual change
£/tonne
332
May ‘22
54.9%
72.0%
oilseed rape
Unit
Latest data
Date
Quarterly change
Annual change
£/tonne
713.5
May ‘22
31.5%
31.5%
MILK
Unit
Latest data
Date
Quarterly change
Annual change
pence/litre
40.4
May ‘22
12.5%
34.0%
BEEF
Unit
Latest data
Date
Quarterly change
Annual change
pence/kg dw
438.2
May ‘22
7.4%
9.3%
Pork
Unit
Latest data
Date
Quarterly change
Annual change
pence/kg dw
181.1
May ‘22
26.0%
17.2%
Click a location for
a local overview
East of England
Arable
Pasture
£6,750
£5,750
£10,500
£9,400
£8,500
£6,850
0.0%
0.0%
6.3%
1.5%
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%
5.0%
0.0%
16.7%
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%
0.0%
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%
3.7%
9.5%
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%
6.1%
8.0%
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
£10,500
£9,000
£8,500
£7,500
6.3%
7.1%
9.0%
10.3%
Pasture
East Midlands land values
West Midlands
Arable
Low
£ / acre
Prime
£ / acre
£ / acre
Quarterly %
Annual %
Average
£8,500
£7.000
£12,500
£10,000
£10,000
£8,500
0.0%
0.0%
4.2%
6.3%
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
£11,000
£8,850
£10,000
£8,500
0.0%
0.0%
5.3%
6.3%
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
Get in touch
Click a trend for more info
EMAIL MARK
01223 346628
Partner
Mark Russell
EMAIL MARK
01223 346628
Partner
Mark Russell
When annualised over a 10-year period, arable and pasture land values have grown by 2.9% and 3.7% respectively, showing strong performance over the longer term. Both, however, are still behind their peak in Q2 2016. Average arable land values are 12.0% lower than in Q2 2016 and pasture land is 3.3% lower. Lifestyle land values, on average, were flat compared to last quarter but, year-on-year, there has been a significant increase of 15.7%.
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%
10.8%
5.3%
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
91.58
May '22
31.8%
92.5%
Fertiliser
Unit
Latest data
Date
Quarterly change
Annual change
£/tonne
715.7
May '22
10.2%
151.8%
Red Diesel
Unit
Latest data
Date
Quarterly change
Annual change
pence/litres
106.9
May '22
106.9
71.6%
Feed Wheat
Unit
Latest data
Date
Quarterly change
Annual change
£/tonne
332
May ‘22
54.9%
72.0%
OILSEED RAPE
Unit
Latest data
Date
Quarterly change
Annual change
£/tonne
713.5
May '22
31.5%
53.0%
MILK
Unit
Latest data
Date
Quarterly change
Annual change
pence/litre
40.4
May ‘22
12.5%
34.0%
BEEF
Unit
Latest data
Date
Quarterly change
Annual change
pence/kg dw
438.2
May ‘22
7.4%
9.3%
Pork
Unit
Latest data
Date
Quarterly change
Annual change
pence/kg dw
181.1
May ‘22
26.0%
17.2%
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Tap a location for
a local overview
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
View on desktop for a full overview
South West land values
EMAIL david
01962 833386
Partner
David Hebditch
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.
Low levels of supply in the market will continue to place upward pressure on land values. The cumulative acreage of publicly advertised land in June (year-to-date) was 38.4% lower than the 5-year average and 49.5% down on the 10-year average. Compared with the same period in 2021, supply is down 17.4%. Almost 26,000 acres came to the market in the quarter, 16.0% lower than in Q2 2021.
Supply and the impact of structural changes
Soaring agricultural input prices coupled with only modest rises in output prices continues to ignite profitability concerns in the market. There are a lot of uncertainties around how much longer volatility will continue for global energy, grain and oilseed prices. With the two countries being key players in the global commodity market, destruction of Ukraine’s export infrastructure and sanctions placed on Russian trade has been detrimental.
Commodity price trends
Sheep
Chicken
£400
£1,800
£1,100
2.3%
37.5%
Hill
£500
£1,500
£1,000
0.0%
0.0%
Hill
£1,650
£2,750
£2,100
0.0%
10.5%
Hill
£10,700
£13,750
£12,250
0.0%
6.5%
Lifestyle
£1,600
£3,700
£2,600
0.0%
8.3%
Hill
£10,500
£15,500
£13,000
0.0%
4.0%
Lifestyle
£10,500
£12,500
£11,500
0.0%
4.5%
Yorkshire Wolds
£13,500
£25,000
£16,750
0.0%
1.5%
Lifestyle
£7,500
£12,000
£9,000
0.0%
0.0%
Silts and Fen
£10,000
£20,000
£15,000
0.0%
42.9%
Lifestyle
£13,500
£22,000
£16,750
1.5%
8.1%
Lifestyle
£7,500
£12,000
£9,000
0.0%
2.9%
Silts and Fen
£14,000
£30,000
£20,000
0.0%
42.9%
Lifestyle
SHEEP
Unit
Latest data
Date
Quarterly change
Annual change
pence/kg dw
662.3
May ‘22
14.2%
-0.1%
CHICKEN
Unit
Latest data
Date
Quarterly change
Annual change
pence/kg dw
311.0
May ‘22
6.1%
15.6%
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
662.3
May ‘22
14.2%
-0.1%
CHICKEN
Unit
Latest data
Date
Quarterly change
Annual change
pence/kg dw
311
May ‘22
6.1%
15.6%
Ongoing cashflow concerns
EMAIL SOPHIE
020 7493 0685
Senior Research Analyst
Sophie Davidson
(Please view desktop version for graphs)
However, market sentiment is largely positive and there is high demand from both farming and non-farming buyers who are purchasing land for a variety of uses. We are still seeing high-quality land in desirable locations sell off-market at premium prices and cash buyers with rollover funds (through Business Asset Rollover Relief) driving demand. Carter Jonas continues to monitor the changing nature of the farmland market and the influences on land values in England and Wales.
FIGURE 2: Annualised Change in Average Land Values in England & Wales to June 2022
FIGURE 3: Annual Publicly Marketed Farmland Supply
Still, demand for farmland, for both arable and pasture, continues to build from a range of buyers. In particular, the secondary market is being underpinned by environmental buyers who, at an increasing rate, are purchasing land to deliver natural capital or meet biodiversity net gain (BNG) objectives. With the introduction of mandatory BNG imminent, we anticipate that environmental buyers will continue to bring capital to the market, increasing competition for land and, subsequently, applying upward pressure on prices.
Estates with multiple income streams or with development potential are highly sought after. Spreading risk through diversification (or having the ability to do so) has become increasingly important, particularly with inflationary pressures progressively causing disruption to farming businesses. BNG is likely to be among the first significant drivers of natural capital-based income streams for land, offering new opportunities for landowners to create and improve habitats and sell these as credits to developers.
However, with food security moving up the agenda, debate is evolving around changing the use of land away from food production and towards environmental schemes or for development. While the main demographic of buyers remains those purchasing land for farming purposes, structural change coming from the natural capital sphere and sustained demand from lifestyle buyers will compete for land with food production and serve to increase polarisation in the market.
The ‘government food strategy’, published by Defra in June in reaction to soaring energy prices and food supply concerns, pledges to support farmers in the UK. Among numerous objectives aimed at tackling issues such as labour shortages and climate change, it outlines their commitment to producing a ‘land use framework’ in 2023 in England. Although there is little information at this stage, it does refer to ‘targeting land-use change at the least productive land’. It suggests that this will enhance the environmental output from agricultural land and increase yields by condensing the land used for food production.
Alongside the Government’s environmental land management schemes, we are likely to continue to see shifts in the agricultural landscape in England and Wales and see supply and demand dynamics change with it.
Average Land Values in
England & Wales
FIGURE 2
Annualised Change in
Average Land Values in
England & Wales to June 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
In the short term, higher output prices could mean good margins are attainable for 2022, particularly for arable farmers who have forward-bought fertiliser. Yet, great pressure is being felt by those who have not forward-bought; in the pig and poultry sectors, in particular, feed accounts for 60%-85% of production costs (Farmers Weekly). The situation is looking more challenging for 2023, especially if supply disruption continues and inflation remains high.
Fertiliser has seen a 151.8% year-on-year increase but did witness even higher prices earlier in the quarter before a moderate fall in May. Final figures for Q1 show that the average fertiliser price in March was £838.75/tonne, 17.2% higher than in Q2. Crude oil and red diesel have also escalated in price again this quarter, rising by 31.8% and 35.1% respectively. The price of all three inputs have been climbing since Q4 2020 but have jumped to particularly high levels in the first half of this year.
With global grain supplies under significant pressure, the price of domestic wheat and oilseed rape are at historic highs. Despite reasonable fluctuations in prices over the last 10 years, neither commodity has not seen such a high quarter-on-quarter percentage change since 2007. It appears that EU and UN leaders are no closer to agreeing a safe corridor for exports out of Ukraine and, consequently, domestic grain prices are likely to remain elevated.
According to Defra data published this quarter, the volume of land going through the mandatory two-year conversion period to organic in England and Wales rose by 26.7% in 2021 against the previous year. Not only is there an increasing consumer appetite for organic produce (the Soil Association reported that the UK organic market was worth £3.05m in 2021, the highest ever value), but it cuts the use of ever more costly chemical fertilisers. Likewise, converting to organic farming offers preferential government support; both the Countryside Stewardship scheme and Sustainable Farming Incentive offer grants for organic conversion and land management. As such, and as Basic Payment Scheme subsidies decrease further, we can expect organic conversions to continue to rise through 2022.
With the aim to help farming businesses in the short-term, Defra has offered an advance on half of the Basic Payment Scheme in England, paid in July. This welcome cash injection should help to ease immediate cashflow concerns, in the hope that input and output prices reach a better balance in the near future.
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
Soaring agricultural input prices coupled with only modest rises in output prices continues to ignite profitability concerns in the market. There are a lot of uncertainties around how much longer volatility will continue for global energy, grain and oilseed prices. With the two countries being key players in the global commodity market, destruction of Ukraine’s export infrastructure and sanctions placed on Russian trade has been detrimental.
In the short term, higher output prices could mean good margins are attainable for 2022, particularly for arable farmers who have forward-bought fertiliser. Yet, great pressure is being felt by those who have not forward-bought; in the pig and poultry sectors, in particular, feed accounts for 60%-85% of production costs (Farmers Weekly). The situation is looking more challenging for 2023, especially if supply disruption continues and inflation remains high.
Fertiliser has seen a 151.8% year-on-year increase but did witness even higher prices earlier in the quarter before a moderate fall in May. Final figures for Q1 show that the average fertiliser price in March was £838.75/tonne, 17.2% higher than in Q2. Crude oil and red diesel have also escalated in price again this quarter, rising by 31.8% and 35.1% respectively. The price of all three inputs have been climbing since Q4 2020 but have jumped to particularly high levels in the first half of this year.
With global grain supplies under significant pressure, the price of domestic wheat and oilseed rape are at historic highs. Despite reasonable fluctuations in prices over the last 10 years, neither commodity has not seen such a high quarter-on-quarter percentage change since 2007. It appears that EU and UN leaders are no closer to agreeing a safe corridor for exports out of Ukraine and, consequently, domestic grain prices are likely to remain elevated.
According to Defra data published this quarter, the volume of land going through the mandatory two-year conversion period to organic in England and Wales rose by 26.7% in 2021 against the previous year. Not only is there an increasing consumer appetite for organic produce (the Soil Association reported that the UK organic market was worth £3.05m in 2021, the highest ever value), but it cuts the use of ever more costly chemical fertilisers. Likewise, converting to organic farming offers preferential government support; both the Countryside Stewardship scheme and Sustainable Farming Incentive offer grants for organic conversion and land management. As such, and as Basic Payment Scheme subsidies decrease further, we can expect organic conversions to continue to rise through 2022.
With the aim to help farming businesses in the short-term, Defra has offered an advance on half of the Basic Payment Scheme in England, paid in July. This welcome cash injection should help to ease immediate cashflow concerns, in the hope that input and output prices reach a better balance in the near future.