Fields for carrots or carbon?

Private investors and lifestyle buyers are driving the demand for land as conventional farming families are encouraged to leave. Rupert Bates wonders who will be putting food on our plates

JUST as you cannot call yourself a vegetarian butcher, a hobby farmer is not a farmer. Food production is anything but ‘an activity you do for pleasure when not working’. Our relationship with land is a confused one. It is a finite resource, which makes its acquisition competitive and its range of uses conflicting. Boo to new homes, no matter how many your neighbourhood might need; hurrah to pop stars and actors looking to offset their air miles by rewilding – prancing with wolves.

Lost amid all the greenwash and guilt is the fundamental imperative to produce our own food sustainably, with the highest standards of animal welfare and supported by local supply chains. When we talk about farmland value these days, we rarely talk about it in terms of its primary value: feeding the nation.

The economics of agriculture, its funding mechanisms and trade deals, are Byzantine – has there been a more depressing term than the Government’s lump sum exit scheme? Capitalise your subsidy payments and ride into retirement. Thanks for the multigenerational stewardship of the land and food on our tables; off you trot for a pint and a ploughman’s on us in the Anachronism Arms. It is not helped by the febrile climate change debate conflated with food activists blaming meat for environmental ills.

Savills research reveals that in the 12 months to December 2021 average values for all farmland types rose by 6.2%, as restricted supply and continued interest from the traditional sources of farmland purchasers, along with the ‘ESG [Environmental, Social, and Governance] motivated buyer,’ supported price growth.

Alex Lawson of Savills says: “From a macroeconomic perspective, farmland historically has acted as a good hedge against inflation and in the continuing low-interest environment it has increased appeal as an asset class in a mixed portfolio. More recently its new value as a tangible store of authentic carbon and important environmental credentials has only added to its investor appeal and we see no reason for this to change.”

Savills expects poor-quality grassland to rise in value – around 6% a year over the next four years – with pasture providing valuable carbon and water management services. “Woodland planting projects for carbon offsets are also targeting grassland, seeking sites which do not have any limiting factors for tree planting,” says Lawson, adding that demand for farms with a strong amenity or lifestyle appeal will remain “as a result of the pandemic’s long-lasting impact on working practices”.

Matthew Sudlow of Strutt & Parker believes the farmland market remains robust, with farmers still buying more than half the farms sold. “However, the reality is that most of the farmers who bought land in 2021 funded it either with rollover money or income generated from diversified enterprises.”

The lifestyle buyer, the first cousin of the hobby farmer, as well as private investors looking for a safe asset to store their wealth, are also driving demand, as are the rewilders and tree planters coveting environmental projects. How long before the term farmland becomes obsolete? Food for thought, if not the fork.