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Overview of the Agricultural Sector

An overview of the sector in the past 12 months in the sector, and a look forward to 2012.

Colin Clark,

agriculture partner at Pagan Osborne and accredited agricultural law specialist, said:

“It has been a year of real ups and downs in the farming world in 2011. We started off with snow and look like ending with snow. In between, a good spring was followed by what seemed like almost continual rain right through into late autumn. Some of the rainfall statistics are almost unbelievable but waterlogged fields, grain being cut at 30% moisture or more plus huge drying costs show that the rainfall figures were right.

“Grain prices have been falling and potato prices hugely down on last year and while some livestock farmers are doing well it has been a very difficult season and on top of all that CAP reform is firmly back on the agenda.

“Despite all that land prices have held up remarkably well. Some stock or dairy farms in the west may be difficult to sell but that contrasts with arable land where the prices have held up incredibly well. The sales and purchases with which we have been involved show there is still a big demand for land largely from farmers which is a reflection of the laws of supply and demand. There is relatively little land for sale, a lot of potential buyers which puts the price up.

“The uncertainty caused by CAP reform does not seem to have affected land values so far. It is however having an effect on reorganisation of businesses and of those who may be buying SFP. It appears that 2011 has been chosen as the base year and that future subsidies will be linked to those who claimed in 2011. It is not clear what will happen to new entrants or new start up businesses or those who may inherit or buy SFP between 2011 and 2014/2015 when the changes come into force and who did not claim in 2011.

“Will they lose out or will there be some type of National Reserve?  It does not encourage succession planning for example or other changes to business structures if that might result in difficulties claiming SFP from 2014/2015 onwards.

“There will be losers and gainers from any changes but it seems certain that the subsidy system will become even more complicated rather than being simplified which was one of the original aims.

“Farmers and landowners are resilient, they have to be to cope with the weather. They are in the business of farming for the long term and history has shown them to be innovative and adapt to change and I have no doubt they will be able to face and overcome the challenges which lie ahead.”

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