The extent of the setbacks facing English farmers may prompt
some to quit, Knight Frank warned, but said that the land market was placed to "bounce"
nonetheless from its slowest year since at least 2004.
Supplies of England land up for sale in 2013 may rise "as
some highly-geared producers with one bad harvest in the barn, and another in
the ground, decide to call it a day", Andrew Shirley, Knight Frank's head of
rural property research, said.
The caution follows setbacks to farmers from the country's
wettest year on record in 2012, marked by the worst wheat yields in 20 years,
and the smallest potato harvest since the 1970s, and by poor sowing conditions
which have left some growers without any winter crops in the ground.
Agrimoney.com cautioned earlier this week that this year
could prove difficult for UK growers, who this time may not receive compensation
in higher prices for disappointing harvests.
Farmland lags shares
The impact of the poor 2012 harvest has already been felt on
English farmland prices which fell 1.3% in the second half of the year.
This slowed growth for 2012 as a whole to 2.7%, making it
the weakest year for price rises since at least 2004.
Annual rises in English farmland prices, according to Knight Frank
Indeed, London shares outperformed farmland in 2012 for the
first time since the global financial crisis.
"Unsurprisingly, given the summer washout that badly
affected harvest, all of the growth in farmland values came in the first half
of the year," Mr Shirley said.
However, with factors including a threat of UK stamp duty tax
changes, which has been resolved without injury to agriculture, also holding
back values last year, Knight Frank was upbeat over prospects, pegging price growth
in 2013 at 5%.
"Uncertainties and interruptions behind us create a clearer
future, and this is no more demonstrated by the appearance of agricultural
investors in the market," Clive Hopkins, head of Knight Frank's farms and estates
"Capital growth opportunities remain and this will attract
national and international interest. We look forward to 2013 and the
anticipated market 'bounce'."
Mr Shirley said that the extra farmland coming up for sale
as highly-geared producers quit was "unlikely" to cause "the kind of glut that
could pull back prices".