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.
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. A changing world Directly, because the higher incidence of extreme weather and the widespread reduction in available water reduces production elsewhere in the world indirectly, because Mr Bush’s announcement of yet more emphasis on biodiesel for energy security has extended the use of land for energy crops, thus reducing that available for food crops. Mexico is now experiencing food-price inflation to such an extent that its free-market president has had to intervene in the “Taco-revolt”. Unilever, one of the world’s largest food processors, has warned that the pressure of biofuel production will have a serious effect on world food prices. Add to that the demands of an ever-growing world population and you see why commodity prices will continue strong. That is particularly true because an ever-increasing middle class in developing nations tends to move away from traditional diets to Western foods and this puts even more pressure on temperate food production. For all sorts of other reasons this may not be good news for the world, but it is certainly music to the ears of those concerned with rural property in the UK. High street says no to out-of-town Good news this week from the British Council for Shopping Centres. In a hard-hitting response to Ruth Kelly’s consultation paper on Kate Barker’s planning and land use proposals, chief executive Michael Green slates the Barker proposal on out-of-town shopping. He points to the glaring inconsistency that exists between reiterating the government’s commitment to the high street and then proposing an end to the need test. Not that the contradiction is surprising. Not producing a coherent planning policy is the hallmark of the past 10 years. Ever since reform was hailed both as allowing more participation and as speeding up the planning process, the government has been at sixes and sevens. You can either speed it up or you can increase the stakeholder numbers – you can’t do both. The trouble is that, if you raise expectations, you cause even more delay and discourage even more investment. As the BCSC says, we need certainty. People have been encouraged to invest in the high street because of the clear guidance I gave back in the early 1990s and which this government has, by and large, continued. To cast doubt on the policy now is seriously damaging to confidence as well as raising hopes that will never be fulfilled. There is no real possibility of a return to out-of-town development. Local councils have no appetite for it. They know it is unpopular with the electorate. Now that recent polls have put the frighteners on Gordon Brown, even he will be less likely to go along with Kate Barker’s Treasury orthodoxy – because there’s nothing new about her proposals. It was what the Treasury tried to force on me in 1995 when it caught up with the reality of the out-of-town ban. It is right that the BCSC should remind the Treasury that what was wrong then is doubly wrong now that developers have trusted the government – and invested accordingly.