A report published by the Royal Institute of Chartered Surveyors at the end of January, tells us that farmland prices reached a record high in H2 2012. Prices have steadily grown since 2009 and are predicted to continue to do so. This is a very different story to the residential housing market which has experienced decline since 2009 with predictions that a further dip in the market will preceed any chance of growth this year.
So why is farmland holding its value while residential land isn't? The report explains that the price hikes are being driven by demand from large scale commercial farmers looking to expand their land and cash in on the rising (although volatile) agri commodity prices. As a result, the amount of available land is diminishing thus driving up prices. No surprises there - basic economics. What is surprising is the difference in land pricing between farmland with residential components and without.
Farmland with a higher residential component is increasingly available and achieving much lower prices. But I don't think the lower price is solely related to availability. A small plot of land with a residential component is a smallholding. In theory the press would lead us to believe that food is relocalising, that there is a shift towards locally grown, artisanal foods and the future of food is small. In theory this should also mean that smallholdings are en vogue. So why the increasing availability and declining prices?
It could simply be that making a living from a smallholding is difficult. It is bloody difficult. Smallholder magazine offers some advice mainly centred aroudn try to find a premium market to sell into or continue working a full time job to make a living which effectively makes a smallholding a hobby. Except, running a smallholding is anything but a hobby. It takes a lot of time, energy and money and should be a livelihood. Farming has historically always been a means of a livelihood. When did that stop?
Alternatively, the so-called market trends towards local foods are incorrect. Consumers respond to labels like 'Organic' or 'Fairtrade' without fully understanding what these labels mean. A friend recently shared this chart with me on Facebook as if he was uncovering some mass conspiracy when in fact all it is showing is leading food companies buying into the 'organic' trend (whatever that may mean). Similarly, sharing this article on Whole Foods' disregard for labour laws was responded to in shock and disbelief. People think Organic means artisan, local, anti-corporation when actually it just refers to the growing techniques applied to the ingredients used. Also, Fairtrade only applies to products sourced internationally as UK workers are (supposedly) protected by EU labour laws. So actually, any consumer 'trend' towards organic, fairtrade, local, healthy foods is actually a trend in perceived organic, local, fairtrade, healthy foods. It means very little for the smallholder unless consumers bother to shop at farmers markets where they can buy directly from smallholders - that can make a difference (Londoners, I urge you to check out CCFM and LFM)
Or it could be a labour shortage. It has been well reported that there are concerns for the next generation of farming. Not enough young people are turning towards a life on the land. New reality tv shows like First Time Farmers and campaigns led by the NFU and Farmers Weekly are fighting to encourage young people to consider agriculture over sitting behind a computer for a living. But when it is so difficult to live off a smallholding, you can't blame people for not making it their first choice.
How can we change this status quo? First of all, make it easier for smallholdings to reach the market. Supermarkets need large scaled regular contracts which are difficult for smallholdings to fulfill. Instead, lets promote farmers markets where consumers buy direct from farmers, SMEs sourcing from each other and restaurants matching their menu to available food not vice versa. Second, we need to rethink food. So long as food crops are commodities and traded as such, large-scale agriculture will continue to dominate. But we are still facing problems of availability of certain crops. Speaking to a large beer company recently, I heard that as Barley (a vital ingredient for lager) is not a commodity crop, UK farmers are moving away from growing it substituting it for wheat or corn instead where they can get a much higher price. And you can't blame them, they are running a business too. Barclays have bravely made the first move by halting speculative trading on agri-crops using hedge fund money. But this cute sentiment wont fix the problem alone.
Unless a monumental change in the food system occurs, we run the risk of diminshing smallholdings to a hobby. They used to be integral to society, the food system and to community. They are still an integral part of my Saturday morning farmers market routine. Let the land prices be a warning that leads to significant change, not another story lost in industry press.
So why is farmland holding its value while residential land isn't? The report explains that the price hikes are being driven by demand from large scale commercial farmers looking to expand their land and cash in on the rising (although volatile) agri commodity prices. As a result, the amount of available land is diminishing thus driving up prices. No surprises there - basic economics. What is surprising is the difference in land pricing between farmland with residential components and without.
Farmland with a higher residential component is increasingly available and achieving much lower prices. But I don't think the lower price is solely related to availability. A small plot of land with a residential component is a smallholding. In theory the press would lead us to believe that food is relocalising, that there is a shift towards locally grown, artisanal foods and the future of food is small. In theory this should also mean that smallholdings are en vogue. So why the increasing availability and declining prices?
It could simply be that making a living from a smallholding is difficult. It is bloody difficult. Smallholder magazine offers some advice mainly centred aroudn try to find a premium market to sell into or continue working a full time job to make a living which effectively makes a smallholding a hobby. Except, running a smallholding is anything but a hobby. It takes a lot of time, energy and money and should be a livelihood. Farming has historically always been a means of a livelihood. When did that stop?
Alternatively, the so-called market trends towards local foods are incorrect. Consumers respond to labels like 'Organic' or 'Fairtrade' without fully understanding what these labels mean. A friend recently shared this chart with me on Facebook as if he was uncovering some mass conspiracy when in fact all it is showing is leading food companies buying into the 'organic' trend (whatever that may mean). Similarly, sharing this article on Whole Foods' disregard for labour laws was responded to in shock and disbelief. People think Organic means artisan, local, anti-corporation when actually it just refers to the growing techniques applied to the ingredients used. Also, Fairtrade only applies to products sourced internationally as UK workers are (supposedly) protected by EU labour laws. So actually, any consumer 'trend' towards organic, fairtrade, local, healthy foods is actually a trend in perceived organic, local, fairtrade, healthy foods. It means very little for the smallholder unless consumers bother to shop at farmers markets where they can buy directly from smallholders - that can make a difference (Londoners, I urge you to check out CCFM and LFM)
Or it could be a labour shortage. It has been well reported that there are concerns for the next generation of farming. Not enough young people are turning towards a life on the land. New reality tv shows like First Time Farmers and campaigns led by the NFU and Farmers Weekly are fighting to encourage young people to consider agriculture over sitting behind a computer for a living. But when it is so difficult to live off a smallholding, you can't blame people for not making it their first choice.
How can we change this status quo? First of all, make it easier for smallholdings to reach the market. Supermarkets need large scaled regular contracts which are difficult for smallholdings to fulfill. Instead, lets promote farmers markets where consumers buy direct from farmers, SMEs sourcing from each other and restaurants matching their menu to available food not vice versa. Second, we need to rethink food. So long as food crops are commodities and traded as such, large-scale agriculture will continue to dominate. But we are still facing problems of availability of certain crops. Speaking to a large beer company recently, I heard that as Barley (a vital ingredient for lager) is not a commodity crop, UK farmers are moving away from growing it substituting it for wheat or corn instead where they can get a much higher price. And you can't blame them, they are running a business too. Barclays have bravely made the first move by halting speculative trading on agri-crops using hedge fund money. But this cute sentiment wont fix the problem alone.
Unless a monumental change in the food system occurs, we run the risk of diminshing smallholdings to a hobby. They used to be integral to society, the food system and to community. They are still an integral part of my Saturday morning farmers market routine. Let the land prices be a warning that leads to significant change, not another story lost in industry press.
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