Fortunes are mixed in the farming world
Agriculture in the first six months of 2009 has seen conditions which in many ways resemble the current state of the British weather – that is – unpredictable. George White, founder and partner of Alnwick-based land and property agency George F White reviews the changes in the farming industry this year.
THE global financial difficulties which have dominated the headlines since the autumn have formed a sobering background to the farming scene, but the business is now coming to terms with its effects – and it’s not all gloom and doom.
Livestock farmers have found themselves well placed. There has been a very strong demand for both cattle and sheep.
With smaller numbers of livestock available, the traditional laws of supply and demand have kicked in. Coupled with strong exports thanks to the value of sterling, farmers have seen high prices for suckler cows, beef cattle and sheep.
Arable farmers have not had the same good fortune – and here it has literally been the weather that has played a major part.
Since the phenomenal floods of late summer, when the climate decided to show the financial markets the way to go, arable farming has been limping towards recovery.
Those who managed to sow crops in the autumn are recovering well, however we are anticipating that yields will be down on the last few years. Spring sown crops are showing less promise, with many looking no better than moderate.
In the North East, flood has been replaced by virtual drought, with the lowest spring rainfall levels for many years.
Amongst the many other threatening clouds were the high prices of fuel, and fertilizers – which helped make 2009’s one of the most expensive crops ever to have been sown. And within the last fortnight another £16 drop in the price per tonne for grain has added to the gathering gloom.
As a result of imported dairy products being much cheaper than we can produce here in the UK, dairy farmers are in decline like never before and there are very few dairy farm lets. The recent collapse of Dairy Farmers of Britain will only exacerbate this problem with hundreds of farmers left with excess capacity and no guaranteed income.
With a less than certain outcome for farming in the offing, the huge raft of rent review negotiations which recently took place for the March to May reviews have proved to be extremely difficult to calculate.
Predicting three years ahead is a difficult and technical task determined by many factors, and dominating at the moment are the uncertainties in global markets and in agricultural futures.
The land market however has shown confidence. Economic uncertainty in markets has driven many investors to the safe haven of the land market, which also offers tax advantages. George F White anticipates continuing growth in land values. Strong sales during the last six months have shown public and private sale prices reaching as much as £15,000 per acre.
We have found that, in spite of the problems customers have with their banks, the financial companies such as the Agricultural Mortgage Company for whom they are an agent, are very much open for business and have seen a big demand for agricultural mortgages.
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