It is easy to get distracted by headline grabbing deals involving hyper-commercialised farms of 1000 acres or more. But these are not the norm. Indeed in Great Britain, year after year the sale of holdings sized 50 – 250 acres far outnumber larger farm sales, indicating the dominance of ‘small farms’ (by acreage) in the UK.
Although an improving picture, the current farmland market is characterised by very low levels of stock. But of the farms which came to the open market last year, Savills Research found that 75 per cent were holdings of 50-250 acres, in essence 517 apparent ‘small’ farms. Interestingly, 44 per cent of marketed holdings were 50-100 acres in size, a proportion which is only increasing according to Savills Research data.
So, do we therefore need to change our mindsets and the narrative? What actually is a ‘small farm’? There are approximately 192,000 farms of various sizes and types in existence throughout the country. Only 20 per cent of these measure over 250 acres while around 50 per cent of all holdings are just 50 acres or under, with many being family-run units.
Our Farmland Value Survey reveals the strength of demand for farmland holdings of all sizes, with an increasingly diverse range of buyers competing in a scarce market. This supply-demand imbalance saw average GB farmland values rise by 6.2 per cent to £7,180 per acre last year, the strongest annual growth since 2014, with poorer and average quality livestock land leading the way with price growth of 8.8 per cent and 8.7 per cent respectively in the year to December 2021. So who are the buyers that are competing for smaller farms?
A product of various lockdowns has been the well reported ‘race for space’ by urban buyers seeking rural living or indeed a complete change of lifestyle – meaning that the market for smaller farms and land holdings has increased. Over the past couple of years we’ve sold a number of these as well as unequipped bare land for this purpose, with buyers coming from home and abroad.
Some of this demand has come from those looking for property to accommodate tourism and leisure businesses – such as wedding venues and glamping pods – or rural enterprises where value can be added, for example ice-cream production, cider making or online flower delivery. Thus there are also farmers in the market for small units where they can diversify, as well as new urban buyers keen to re-employ their business and marketing skills within a rural setting.
The vast proportion of all land in Scotland is used for farming. Indeed according to latest Scottish Government research an estimated 80 per cent is agricultural land, equating to roughly 6.2 million hectares. However, a growing driver in the market north of the border is the increasing interest in land suitable for tree planting, and this is not always confined to vast areas. Many buyers are considering holdings of just 100 acres upwards and generally offer well in excess of the residual agricultural value. Planters tend to favour poorer quality land therefore strengthening the market for previously less valuable holdings. Indeed we have negotiated a number of such deals in the past 24 months, both on and off market.
This interest from planters has, in turn, pushed up prices paid for other agricultural land. Many established farming buyers, looking to expand or with development rollover money to reinvest, increasingly find themselves in fierce competition for the remaining land on the market. This is leading to strengthening values across all sizes and types.
So what does this all mean for how a farm is marketed? It may sound counter-intuitive but the level of interest for farmland generally decreases in proportion to the size of the holding, or to put it another way, the larger the offering, the smaller the pool of buyers.
Given the increasingly diversified nature of demand, we now regularly lot larger properties to create smaller farms which we can promote to a targeted and distinct groups of buyers. Indeed when it comes to selling your farm, size does matter and small is often mighty.
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