Shropshire Star

Shropshire Farming Talk: Has milk price impacted on land values in 2022?

As with many businesses, the dairy farming sector has experienced an extraordinary transformation during the past 12 months.

Published
Jonty Cliffe

Nobody predicted that the milk price would rise from just over 30p/litre in October 2021 to approaching 50p/litre in October 2022.

Nor, when 2022 costings were derived, did consultants expect to see agricultural input inflation running at well over 30%, with feed, fertiliser, energy and labour costs experiencing the most significant shifts.

The farming press are reporting that this year’s accounts will see most profits doubled, however there will be a marked difference between the top and bottom 10% of producers.

This has created opportunities, with some deciding or having little option other than to steady the ship and reduce debt, whilst others have looked to expand impacting locally on both sale and rental land values.

Although non-agricultural investors and tax driven roll-over buyers continue to underpin high sale prices, there have been more dairy farmers willing to pay £12,000-£15,000 per acre to secure the right plot of land and prevent a non-agricultural buyer taking the land out of production.

In the rental sector, landlords have looked to capitalise on increased profits by pressuring tenants into increasing the rent.

Many tenants have agreed without challenge and we have seen between 10% and 30% increases which have varied depending on the assertion of the landlord.

The demand for rented land has intensified with ruthless tactics utilised wherever necessary to ensure land does not end up on the open market. Several local dairy farms, which saw 2022 as the perfect opportunity to step away from the industry, saw their land snapped up even before the last cow had been sold, much to the disappointment of those who were late to the party.

With increased interest rates, reduced subsidies, a suggested reduction of 15-25% in UK milk prices and no sign of reduced costs, the land market in spring 2023 may not be quite as buoyant as 2022.

However, even with all these considerations, there is a strong possibility that nothing will change.

After all, we are not making any more land and there is only so much to go round.

Jonty Cliffe MRICS, FAAV is a Rural Chartered Surveyor with Barbers Rural and can be contacted on 01630 692500 or j.cliffe@barbers-rural.co.uk

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