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Lies, lies, lies and damn statistics!

12th May 2023

Every year around this time there is quite often a plethora of firms offering facts and figures about farmland transactions over the previous twelve months. These figures are extremely useful and in fact very interesting to note, although there is the strong possibility that the figures can be skewed by a potential one-off sale – it is the trends that are the key points.

Probably more important is the gut feeling that you get from being involved in transactions and involved in enquiries both private and public. To give a clear statement as to where we are now, it would be that demand is well exceeding the supply and there is going to be a strong trade this forthcoming year.

Where we are now, realistically is riding high on the back of a very 2022 year. Strong commodity prices, a number of gross margins not being hit hard by high input prices has resulted in a set of very buoyant accounts. We fully understand that interest rates have risen, which in turn is putting pressure on stress levels for borrowing, but farmland is seen as a long-term investment and realistically long-term money is still realistically cheap. Costs of funds over 20 years cheaper than current base rate! Furthermore, there is still a huge amount of cash in circulation, particularly from development sales or sales for forestry, which has resulted in quite a lot of roll-over funds burnings holes in people's pockets. The advice would therefore be that if you are thinking of selling it is probably best to be proactive about it and take advantage of the situation.

Likewise, if you are looking to purchase, there are an increasing number of transactions being undertaken privately. This is not necessarily properties that are being offered to the market, but often as a direct approach to others when it may not necessarily have been in their thought process. A private approach can quite often open doors that are perceived as being firmly shut.

In summary, whilst the trade is expected to be good, getting on board with someone that you can trust and that can provide the correct advice from a full understanding of the market is essential.