Donald Yellowley is a Partner in DM Hall’s country department based in the Bridge of Allan, Stirling. He is a rural practice surveyor who has worked in rural property for years, and currently undertakes valuations of Farms, Estates and Strategic Land throughout Scotland.
While demand for all manner of land in Scotland has rarely been more urgent, the farm sales market remains stubbornly quiet, and shortage of supply continues to act as a drag anchor as sellers sit tight.
Their reluctance is hardly a surprise. We have seen it before, particularly in the aftermath of the banking crash in 2008, when the air was thick with fear and uncertainty. The last few years in Scotland have also had their share of geopolitical upheavals, generating similar levels of anxiety.
But while it is a natural instinct for farmers to wait out a crisis – land, after all, does not go off – it does create something of a conundrum for them, since those who do take their properties to market are achieving quite stellar prices from a jostle of competing willing buyers.
In fact, it could be argued that now is the time – indeed, there has hardly been a better time – for land management professionals to realise assets, with the provision that they should be guided in their enterprise by experts such as Baird Lumsden, the rural department of DM Hall Chartered Surveyors.
The disposal of properties with which we have been entrusted over the past 12 months has been singularly successful, with almost all attracting intense interest, going to a closing date and achieving prices well in excess of what the sellers had anticipated.
Despite what might be assumed from a superficial glance at the agricultural sector in Scotland, farming is actually in quite a good state at the moment. Certainly, inputs such as fertiliser and fuel prices are up, but so are returns on cereals, lamb and beef. Potato prices are slightly down, but they had a good run last year.
The subsidy regime, delivery of which has transferred from the EU into the hands of the UK Government, is functioning as it should and is likely to do so for the foreseeable future, though it will begin to taper off in the next few years. The focus moving forward is on sustainability and modern farming methods that balance social and economic needs.
Subsidies are also likely to be associated much more closely with the current environmental agenda, with incentives to plant trees and protect hedgerows, rather than as a simple financial prop for unproductive businesses.
Income from traditional farming activities remains an important factor, but gross revenues now tend to include woodland planting, carbon capture and in many cases, substantial commercial and leisure activities.
And while the great majority of farm sales are to neighbouring businesses which are keen to expand, events of the past few years have generated a new mix of competition for rural assets, from lifestyle buyers to foreign investors in land suitable for forestry.
The attraction for this latter class is the ability of woodland to capture and store carbon dioxide, meaning it can help combat climate change. This opens up a potential new income stream through trading carbon credits under the Woodland Carbon Guarantee scheme which came into force in 2019.
Buyers from around the world are seeking to buy not just forests, but Scotland’s ubiquitous peat bogs, in order to offset carbon emissions created elsewhere. It is one of the few places where green resources can be acquired on a meaningful scale.
For those farmers who do decide to test the market, the rewards will be high as demand for land continues to soar internationally.
It is also of vital importance to keep up to date records – including cropping and yield records, soil analysis, improvement records and conservation achievements – and have the paperwork on hand for the inspection of prospective buyers.
As ever, professional advice is paramount. A good agent will not only have a ready-made pool of potential buyers, but an intimate knowledge of market timing as well as access to all the most modern marketing tools, including a dedicated media team to reach an international audience.
It is a seller’s market. If farmers are looking for a successful and rewarding exit, now is the time.