It would be impossible to review the fortunes of the last 10 years without mentioning the aftershock of the 2008/09 global financial crash (GFC) which, amongst other things, turned economic growth negative, increased national debt and caused house prices to fall. 

Since 2010, however, the UK economy has grown fairly steadily with GDP recording an annualised increase of around 1.9 per cent per year compared with 3 per cent in the decade prior to the GFC (to 2007).

The general economic recovery has no doubt been muted by considerable political upheaval, including the Scottish independence referendum in 2014, the EU membership referendum in 2016, four general elections and Brexit.

For the rural sector, the latter has heralded the most significant change of policy in 50 years, including a new Agriculture Bill, the 25 year Environmental Plan, an Environment Bill, a Clean Air Strategy and Zero Carbon.

Price of food

According to the Consumer Price Index, the price of food has increased 16 per cent over the past 10 years. In addition, the ONS consumer trends show that the overall value of food consumed per person has increased by 27 per cent (more than the price of food) to around £2,500 per year (this includes catering but excludes drink).

With more than 65 million mouths to feed, increasing food prices, and an increase in the value of food consumed per person, the new policy regime must open opportunities to increase domestic production and reduce our reliance on imported food.

Positive trend for agriculture

It is somewhat surprising perhaps that the Government’s aggregate ‘state of the industry’ figures show that the overall trend over the past decade has been reasonably positive for agriculture (see graph below) – an annualised increase of 3 per cent (in current prices) buoyed, especially in the second half of the decade, by the weak pound. This made exporting easier, increased the value of CAP euro denominated subsidies and helped attract overseas tourists to diversified rural businesses.

In addition, interest base rates have been at an all-time low – entering the period at 0.5 per cent, falling to 0.25 per cent in 2016/17 and leaving the decade at 0.75 per cent. No doubt the low cost of borrowing has also helped insulate some farming businesses from the pressures of servicing debt.

The past decade has also witnessed some significant changes in food and consumer trends such as:

• Alternatives – the appetite for meat and dairy alternatives is growing as an increasing number of people look for a wider variety of meals. Oat, soy and nut milks have increased in popularity and meat alternatives are turning the fast-food industry on its head
• Convenience – this has driven consumer innovation and meals-to-go have risen rapidly as a plethora of start-ups access the last-mile delivery space
• Controlled Environment Agriculture – driven by technological innovation, vertical farming is becoming a viable production method for higher value crops

Farmland values

As for the average value of farmland, according to our Farmland Value Survey this peaked in 2014 following a significant price increase (average over 300 per cent) over the preceding 10 years. Average farmland values, despite weakening since 2014, ended the decade around 50 per cent higher than in 2010 having achieved a 10 year annualised growth of around 4 per cent.

The political uncertainty has ensured that the past decade concluded with a year (2019) of the lowest amount of publicly marketed farmland on record at just short of 120,000 acres across Great Britain, as recorded by our database.

Further information

Contact Savills Rural Research or learn about rural land values in the UK