Price of Farmland

DaveGrohl

Member
Mixed Farmer
Location
Cumbria
I have to agree with Clive to a large extent. It's going to take a momumental shift in worldwide monetary thinking before we see any significant rise in interest rates. Every central bank in the world is copying the Fed's money printing philosophies. They are thigh deep in the destruction of money, it's the only tool they've got, more of the same sh1t that got us here in the first place. A proper rise in interest rates will simply blow the worldwide economy to kingdom come. That's the system we have now.

I remember getting a loan for under 10% and thinking we were really going places!! Obv that was back in the day when people felt some sort of responsibility for finance rather than the ah fekk it attitude of today.

Destruction of money equals asset price inflation, so land values will have some protection as a result.
 

Clive

Staff Member
Arable Farmer
Location
Lichfield
I’m looking at some land for sale over the hedge at the moment, guide price would just about buy 3 buy to let houses which would easily return 3 times the rental value of the land and are possibly more likely to achieve a better increase in value over the long term albeit with the probability of more hassle from tenants.

historically you would be right ........ the future however ?

i’ve been selling rental houses for the last few years to buy more land
 

Clive

Staff Member
Arable Farmer
Location
Lichfield
I have to agree with Clive to a large extent. It's going to take a momumental shift in worldwide monetary thinking before we see any significant rise in interest rates. Every central bank in the world is copying the Fed's money printing philosophies. They are thigh deep in the destruction of money, it's the only tool they've got, more of the same sh1t that got us here in the first place. A proper rise in interest rates will simply blow the worldwide economy to kingdom come. That's the system we have now.

I remember getting a loan for under 10% and thinking we were really going places!! Obv that was back in the day when people felt some sort of responsibility for finance rather than the ah fekk it attitude of today.

Destruction of money equals asset price inflation, so land values will have some protection as a result.

the lightbulb moment when an individual understand the completely theoretical nature of money is the most life changing thing than can happen to a modern human being IMO !

money is population control - nothing more


they have messed up though - war would come before interest rate rises now, the hole is too deep !
 

midlandslad

Member
Location
Midlands
yes - better even maybe

not that it’s really very relevant to value

I think that longer term, the change of support will be a positive move for the industry and lead to greater returns.

In the short term though there are going to be lots of farms that are going to really struggle and potentially have to restructure. It is only those that have a truly lean business that are going to survive.

There are a lot of farm businesses that rely on the bank to keep going, which is ok whilst that support is there, but it won't last forever.

I think that there will be pressure on land prices in the short term as we go through the period of change.

I know that you think that value is not relevant to value, however, it must come into it a some point, as the majority of purchasers are farmers borrowing to buy in my experience and they are reliant on the returns to convince the bank to support them.
 

Clive

Staff Member
Arable Farmer
Location
Lichfield
I think that longer term, the change of support will be a positive move for the industry and lead to greater returns.

In the short term though there are going to be lots of farms that are going to really struggle and potentially have to restructure. It is only those that have a truly lean business that are going to survive.

There are a lot of farm businesses that rely on the bank to keep going, which is ok whilst that support is there, but it won't last forever.

I think that there will be pressure on land prices in the short term as we go through the period of change.

I know that you think that value is not relevant to value, however, it must come into it a some point, as the majority of purchasers are farmers borrowing to buy in my experience and they are reliant on the returns to convince the bank to support them.

those that can’t cope without bps shouldn’t be in business today.......but support will continue just under new titles, like money it’s a means of control and balance that needs to be maintained by governments so will be

a restructuring of this basket case industry is long over due

cheap (free) money will help ease and pain - and remember FARMING (the trade). has bugger all to do with LANDOWNERSHIP (investment)
 

Hilly

Member
government bonds (safe as land) are fractions of a % return now

1-2% from ag rents or returns suddenly looks very good to people with lots to invest ...... that return is before you consider likely capital increases as well

it’s also VERY safe - you can not quantitatively ease land !
historically you would be right ........ the future however ?

i’ve been selling rental houses for the last few years to buy more land
How much better is land to houses ?
 

midlandslad

Member
Location
Midlands
cheap (free) money will help ease and pain - and remember FARMING (the trade). has bugger all to do with LANDOWNERSHIP (investment)

I agree with your comments about the industry needing restructuring.

To say that ownership is not related to farming is difficult to understand. In the 90's when farm incomes were on the floor, land values dropped. Again in 2007 when wheat prices took off so did land values.

A large proportion of farmland is bought by farmers with borrowed money, they would not do so if they couldn't service the debt as their farming income was low.

Whilst debt is cheap to service, if you borrow £1 million you still have to repay £1 million.
 

Clive

Staff Member
Arable Farmer
Location
Lichfield
I agree with your comments about the industry needing restructuring.

To say that ownership is not related to farming is difficult to understand. In the 90's when farm incomes were on the floor, land values dropped. Again in 2007 when wheat prices took off so did land values.

A large proportion of farmland is bought by farmers with borrowed money, they would not do so if they couldn't service the debt as their farming income was low.

Whilst debt is cheap to service, if you borrow £1 million you still have to repay £1 million.

it’s simple - a farmer makes a living producing food - he has no need to own any land at all to do that, it’s a trade

a landowner is simply an investor, he has no need to farm to see a return on that investment ....... he can rent the use of the land to a farmer

the line gets blurred by some though as anyone making money from farming and then looking to invest those profits is understandably attracted to land as a investment .......... at that point it seems a lot fail to understand where there income now comes from, investment or trade or both
 

andybk

Member
Livestock Farmer
Location
Mendips Somerset
Why have farms stopped coming on the market, something has changed since the late 80ts , farmers must be more content, or better returns, mistory in history!
BPS / rent are a pension for older retired farmers , they can sit in truck and watch it being farmed and stay in familiar surroundings still draw 150+ acre for doing nothing ,i could count half a dozen around here , Or they could sell and get hit with capital gains tax and have to move out the farmhouse . Huge upheaval for someone over 70 .
 

Two Tone

Member
Mixed Farmer
it’s simple - a farmer makes a living producing food - he has no need to own any land at all to do that, it’s a trade

a landowner is simply an investor, he has no need to farm to see a return on that investment ....... he can rent the use of the land to a farmer

the line gets blurred by some though as anyone making money from farming and then looking to invest those profits is understandably attracted to land as a investment .......... at that point it seems a lot fail to understand where there income now comes from, investment or trade or both
Smack on!
That is exactly how former Principal of the Royal Agricultural College, Vic Hughes put it.
But he also added that Land as an investment is where the real money is made.

It stuns me sometimes watching people working out their annual Cashflow forecast and failing to delineate between the Trading and Capital sides of it.
 
the lightbulb moment when an individual understand the completely theoretical nature of money is the most life changing thing than can happen to a modern human being IMO !

money is population control - nothing more


they have messed up though - war would come before interest rate rises now, the hole is too deep !
have you factored in the affects of inflation in the past? our costs have inflated at a much higher rates than our produce, is this not likely to continue? i dont see how this can be good for farmers
 

fgc325j

Member
have you factored in the affects of inflation in the past? our costs have inflated at a much higher rates than our produce, is this not likely to continue? i dont see how this can be good for farmers
As has been said before, on many postings here, whichever party is in power - they want cheap food for the masses, the needs of the many
outweigh those without much clout at the ballot box.
 
Location
Suffolk
In 2007 & 2008 I was looking at smallholdings and went to my bank with a proposal which they accepted and this made me a paper millionaire for a short time! Needless to say I was terrified of a large debt and little skill beyond my trade as I am certainly not a farmer, just a tractor operator if at all.
I did buy the place but shied away from the easy borrowing and haven't regretted doing this. I'd have a load of super shiny machinery and a BIG debt. I do have a load of elderly machinery and a very small debt!
SS
 

D14

Member
Smack on!
That is exactly how former Principal of the Royal Agricultural College, Vic Hughes put it.
But he also added that Land as an investment is where the real money is made.

It stuns me sometimes watching people working out their annual Cashflow forecast and failing to delineate between the Trading and Capital sides of it.

Shouldn’t have any capital in your cash flow.
 

maen

Member
Location
S West
I recall an article,a few years ago, where it stated that because of the high price of Danish farmland, that farmer's were so much
in debt that, upon reaching the age to collect their pensions, the banks were commandeering these monies for loan repayments.
Wether this still holds- maybe one of our danish members could fill in the picture??.
 

maen

Member
Location
S West
I recall an article,a few years ago, where it stated that because of the high price of Danish farmland, that farmer's were so much
in debt that, upon reaching the age to collect their pensions, the banks were commandeering these monies for loan repayments.
Wether this still holds- maybe one of our danish members could fill in the picture??.

I think if the Uk banking test that we all have now grown used to was applied to most Danish Farms they would be technically insolvent. And that is the problem and why there is a treat coming from USA if cheap food. They have plenty. We might not like it but they have plenty!!
 

SFI - What % were you taking out of production?

  • 0 %

    Votes: 80 42.1%
  • Up to 25%

    Votes: 67 35.3%
  • 25-50%

    Votes: 30 15.8%
  • 50-75%

    Votes: 3 1.6%
  • 75-100%

    Votes: 3 1.6%
  • 100% I’ve had enough of farming!

    Votes: 7 3.7%

Red Tractor drops launch of green farming scheme amid anger from farmers

  • 1,294
  • 1
As reported in Independent


quote: “Red Tractor has confirmed it is dropping plans to launch its green farming assurance standard in April“

read the TFF thread here: https://thefarmingforum.co.uk/index.php?threads/gfc-was-to-go-ahead-now-not-going-ahead.405234/
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