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Feed the world, fuel the world? UK farmers should get ready

For a couple of years now, in my annual New Year forecast, I have suggested that these would be good times for the rural practitioner. This month’s figures for 2006 certainly underline that view. Some farmland has increased in price by 25% in less than 12 months. On average, it’s up by more than 18% and the surprising thing is that it doesn’t vary much with or without a farmhouse. That is a real change in a market that was often a bit sticky when land was offered without a house.

There’s a pretty widespread consensus that the good times will continue, with increases this year above 10%. Of course, the main driver for this is the City bonuses, but this is not the only reason for optimism. Farming itself is in a more buoyant mood. The tightening of commodity prices as world demand increases and China continues its double-digit expansion is definitely affecting farm incomes. This, in turn, brings farmers into the land market and an encouraging number of bargains have been struck by those already in agriculture wanting to expand. It is also true that the growing realisation that climate change is happening is driving prices up, both directly and indirectly.

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