Price of Farmland

[glasshouse]

WTF! - i hope that no one from the Treasury is on TFF, they might get ideas for new taxes to pay off the money the Govt. has borrrowed
during this Covid crisis!!

Big estate near here was bought by a dane in 1999, he then hoovered up a few neighbours.
The danish land tax forced him to sell it all.

 

[Highland Mule]

Big estate near here was bought by a dane in 1999, he then hoovered up a few neighbours.
The danish land tax forced him to sell it all.

It doesn't seem to be stopping Povlsen.

 

[glasshouse]

It doesn't seem to be stopping Povlsen.

His pockets are obviously deeper

 

[Highland Mule]

His pockets are obviously deeper

$9bn apparently. And he wants to live in Sutherland.

 

[midlandslad]

Looking to be a steady year on the farm sales front, no commercial units on the market in the East Midlands.

Do people think there will be a greater supply going forward once people realise the support is disappearing or will they wait until it hurts them in the pocket!?

 

[GeorgeK]

Looking to be a steady year on the farm sales front, no commercial units on the market in the East Midlands.

Do people think there will be a greater supply going forward once people realise the support is disappearing or will they wait until it hurts them in the pocket!?

It is said that farms are sold because of death, divorce and debt, so mostly because they are forced to sell and have no other option. I think this will continue to be the case, smaller farms that are no longer profitable are more likely to rent out the land or put it in environment schemes than sell it. There will be some that stubbornly continue making a loss until the money runs out and are forced to sell, but even then they can sell outlying parcels in order to keep the home farm.
I believe very few farmers will sell their farm based on cold, hard and rational decisions as if it was purely an investment. Many will put up with little or no return and even work for nothing with a job elsewhere in order to keep the family farm.
There will be more outlying parcels up for sale in the short term, in 4-5 years supply of complete farms will increase as subsidy cuts bite, but I'm not sure if there will ever be a flood of sales although I do think prices will drop a bit as earning potential from the land decreases

 

[fgc325j]

It is said that farms are sold because of death, divorce and debt, so mostly because they are forced to sell and have no other option. I think this will continue to be the case, smaller farms that are no longer profitable are more likely to rent out the land or put it in environment schemes than sell it. There will be some that stubbornly continue making a loss until the money runs out and are forced to sell, but even then they can sell outlying parcels in order to keep the home farm.
I believe very few farmers will sell their farm based on cold, hard and rational decisions as if it was purely an investment. Many will put up with little or no return and even work for nothing with a job elsewhere in order to keep the family farm.
There will be more outlying parcels up for sale in the short term, in 4-5 years supply of complete farms will increase as subsidy cuts bite, but I'm not sure if there will ever be a flood of sales although I do think prices will drop a bit as earning potential from the land decreases

But the Banks lend money using the value of the land as collateral, if the value fell, would there not be some deeply
in-debted farmers, who, the banks would cause forced sales, which would cause the price of land to drop a bit more, which in
turn, would bring the next level of large debts into the banks's focus ???. Taking into account the large debts carried by other
businesses, and even more debts taken out due to Covid, and you have to ask what happens when the music stops?.

 

[Hilly]

I know nothing about veg production I admit but I would think potato production has certainly been nothing more than a very good way to lose money this year and not exactly great in recent times ........... there are some big growers around my area who's shoes I certainly would not wish to be in this year, I hope they all are strong enough to survive. I used to be a potato grower so do know a bit about the economics of that job !

Out of touch was a fair description.

 

[db9go]

But the Banks lend money using the value of the land as collateral, if the value fell, would there not be some deeply
in-debted farmers, who, the banks would cause forced sales, which would cause the price of land to drop a bit more, which in
turn, would bring the next level of large debts into the banks's focus ???. Taking into account the large debts carried by other
businesses, and even more debts taken out due to Covid, and you have to ask what happens when the music stops?.

Going forward the banks have a bigger problem with other businesses than farmers.
Farmers det is small compared to others

 

[GeorgeK]

But the Banks lend money using the value of the land as collateral, if the value fell, would there not be some deeply
in-debted farmers, who, the banks would cause forced sales, which would cause the price of land to drop a bit more, which in
turn, would bring the next level of large debts into the banks's focus ???. Taking into account the large debts carried by other
businesses, and even more debts taken out due to Covid, and you have to ask what happens when the music stops?.

Yes that's a good point I know borrowing has been increasing on farms. I'm probably out of touch because I only know the situation in my own little circle which is small family farms owned outright with no borrowings. Whilst they won't make much profit without subsidies, selling a field or two would keep them going for years with a part time job as well. Most wouldn't dream of ever selling

 

[Hilly]

It will take a few years of decreasing subsidies for a lot of farmers to accept the new reality, they will just carry on as they always have, because they've got through the hard times before just fine. Unfortunately they don't realise it was the subsidies that kept them going through the hard times and without them it's not going to be as easy to survive as just cutting back a bit and weathering the storm

I think they do realise just they are willing to try and keep going , what else are they going to do ?

 

[Hilly]

20k per acre could equally end up looking cheap !

that £2.5k :ac i mention in my post above was a record price around here at that time, everyone saiid we were a bit mad to pay so much ....

Can happen , next door sold in early nineties for 1.2 million everyone was shocked , I’d value it at 5.2 today if not more and if it had been modernised farmed properly not chucked into an organic scheme and understocked over staffed and no mantinace as has been could been worth more lot more . So the shocked ones including me we’re well wrong .

 

[midlandslad]

Agricultural debt continues to rise year on year, which isn't necessarily a bad thing as it could be reinvestment to generate greater returns.

Land values and the ability to borrow based on these have risen exponentially over the last 15 years.

I personally do a lot of work with the agricultural banking world and at the moment it appears although the banks are keen for new farming business in order to increase their lending and bonuses. What are other people seeing from banks?

 

[Hilly]

Agricultural debt continues to rise year on year, which isn't necessarily a bad thing as it could be reinvestment to generate greater returns.

Land values and the ability to borrow based on these have risen exponentially over the last 15 years.

I personally do a lot of work with the agricultural banking world and at the moment it appears although the banks are keen for new farming business in order to increase their lending and bonuses. What are other people seeing from banks?

The debt goes up more than likely because the machines get dearer and land gets dearer maybe ? Be a turning point at some time ? Debt everywhere going up in everything ?

 

[Tarw Coch]

The debt goes up more than likely because the machines get dearer and land gets dearer maybe ? Be a turning point at some time ? Debt everywhere going up in everything ?

They say cash is king yet for all my life times have favoured those who have borrowed, you have to wonder will this allways be the case.

 

[midlandslad]

Debt is all fine and helps businesses to grow, the only sticky point is servicing the debt.

The servicing cost will have dropped for most due to the reduction in base rate, however, lenders appear to have added this on to their margin!

It is interesting listening to banks views on farming post bps and they are simply taking the view that this will continue in one form or another so make no allowance in their servicing calculations!

 

[Michelle100]

Land values will not go down. You can't make more land. Unfortunately as farms come on the market they are being swallowed up by investment money, it won't be long for the majority of farm land is owned by a few multinationals.

 

[Tarw Coch]

Land values will not go down. You can't make more land. Unfortunately as farms come on the market they are being swallowed up by investment money, it won't be long for the majority of farm land is owned by a few multinationals.

It’s not unheard of in the past for large institutions to invest heavily in farmland, only to pull out at a later date, selling for far less than they bought.

 

[teslacoils]

Supply
Demand

We've had "ooooh what if since the first switch to sfp entitlements. Buyers have kept buying. Better than cash in the bank.

 

[Hilly]

They say cash is king yet for all my life times have favoured those who have borrowed, you have to wonder will this allways be the case.

No one knows, things can change rapidly these days we live in a new era that things change quicker than ever before which concerns me for agg , agg is like a big super tanker it’s slow boat to turn around but the change is bopping about in litte boat quick to turn, quicker than ever everything sugar today shyt tomorrow .