Why so many farms for sale?

I was speaking with a friend last week who's a farmer in South West Scotland. Amongst other topics, he highlighted the sharp rise in the number of farms that are up for sale in the area.

On a single 33 mile stretch from Newton Stewart to Stranraer, there are now 17 farms up for sale.

Why so many?

Factors such as age may well play a part but I suspect the follows factors are also to blame:

• Interest rates - the Bank of England has raised interest rates, which currently stand at 5.25%, for the fourteenth consecutive time since 2021. Many farmers may well have over stretched themselves during the good times and are now unable to service the level of debt they're facing.
• Lower returns - surging input costs have meant lower returns making many farmers question whether it's worth the effort. Particularly when the underlying value of the land is currently at a record high.
• Industry uncertainty - there are seismic changes [read subsidy changes] taking place in the industry which, I imagine, are making many farmers think seriously about their future. Particularly those who are in the latter stages of their career, the question of 'should we get out when the going is good' will be at the forefront of their minds.

Opportunity or warning?

So what does all of this mean to the likes of you and me? Is this a sign of things to come or an opportunity for those looking to expand.

Firstly, let's not get away from the fact that land prices are still at record highs. Good land in South West Scotland will cost you north of £8,000/acre.

So for those looking to expand and with the ability to buy, it's a great opportunity. But whilst I think inflation has peaked, industry uncertainty and higher input costs are here to stay for a while yet.

Put simply, build a decent margin of error into your calculations before buying!

That said, I do believe that land is, and always will be, a good investment over the long run. So buy if you can and sell only if you really need to.

Until next week.....