Land prices give farmers a chance to consider options

Rising land prices and challenging times in the agricultural sector are providing an ideal time for farmers to consider their options, according to East of England accountants, Moore Thompson.

Bare land in England rose to record price levels in 2022, with arable land averaging £10,600/acre and pasture £8,500/acre. The average price of pastureland rose by 13 per cent in 2022 to £8,500/acre.

This puts arable values £600/acre higher than the previous market peak of 2014-15, with a rise of 12 per cent on 2021 levels, according to recently published data from Strutt and Parker.

“I think the rise in land prices comes at an opportune time as farm businesses plan for the future,” said Andrew Heskin, Partner at Moore Thompson. He outlined that a number of issues were making farmers look seriously at their future strategy. These included;

  • Highly volatile prices for both inputs and outputs
  • Ever increasing pressure to adapt their methods and farming practices.
  • Greater funding requirements due to rising costs and increases in machinery capital costs
  • The phasing out of the current Agricultural Support system
  • Opening up UK markets to world imports following Brexit

“All of this is leading farmers to consider the future of their businesses, and each one requires a bespoke approach,” he added. These options could he explained could include;

  • Diversifying away from agricultural production – with the impact on Inheritance Tax and Capital Gains Tax reliefs to be considered
  • Possible rationalisation of the business to enable it to remain adequately funded (this means selling some land in some cases)
  • Considering selling up altogether, or down-sizing to release capital for the younger generations while the older generation moves into semi or full retirement.

“Of course, all these options have inherent risks and awards which should be considered carefully and over some time. It is always best to seek professional advice from a firm with expertise in the agricultural sector such as ours,” said Andrew Heskin.