The farmland market in 2022 so far has been a story of delay and disruption, but with some notable silver linings to the market outlook.
Delay
Comparing supply in the first quarter of 2022 with 2021 shows another slow start to the year – supply in Great Britain is down 10 per cent year on year, and 16 per cent less than the 10-year average. However, with just shy of 12,800 acres launched in Q1 of this year, large portfolios can skew the statistics on a regional level; in the East of England, there has been a 3.95 per cent year-on-year increase in publicly marketed farmland.
The lack of farmland stock in 2021 meant that assets sold well, with a number of transactions that were agreed in 2021 working through to completion in the first quarter of 2022. Anecdotally, the process of legally completing a farmland sale is taking longer than normal; our data suggests that the average time from launch to exchange is around 420 days due to the ever-increasing complexity of transactions.
Those considering a sale should strive to be well prepared, have all the necessary paperwork together and choose their advisors wisely. Purchasers need to be patient.
Disruption
Hard on the heels of the pandemic, the war in Ukraine has compounded existing inflationary pressures, with prices for animal feed, electricity and fertiliser soaring. This has had a particular impact on the livestock sector, but some arable profit margins have improved due to the increased output prices for crops. While achieving better margins depends on the timing of output sales and purchases and, importantly, the length of the disruption, the market shift could protect farm businesses from another fall in basic payment scheme support this year.
Looking back at historic global shocks, the farmland market demonstrates resilience often supported by a temporary reduction in supply. But it is the impact on the commodity market that has the biggest impact on values, so many will be keeping a watchful eye on how future farmland values in GB are affected.
Farmland values 1995-2021