Outlook – land of opportunity
Despite Covid-19-related uncertainty challenging many assets classes, the outlook for farmland remains positive.
Low supply of quality farmland and the present low cost of debt should continue to support values across many regions. The renewed focus on food security bodes well, providing farmers can access fully functioning markets. The flight to safe and tangible assets following recessionary periods remains a factor that cannot be discounted.
That is not to say the sector does not have its challenges. An ageing farmer population, severe climatic events, dependence on energy-intense inputs and the ever-increasing pressure on profitability will continue to be both hurdles and sources of innovation for landowners and managers. However, the sector should be comforted by an increasing number of competing land uses that reduce stranded asset risk.
How the farmland sector adapts to both the threat and opportunity of climate change is pivotal to its sustainable success. Farmers will play an increasingly important role in protecting and promoting the natural environment as part of their business.
Farm policy evolution must stay ahead of the curve to ensure the structures are in place to enable effective and productive change that balances the requirements of food production with carbon reduction on a global scale.
Rhydian Scurlock-Jones is Head of Rural at Savills Telford
