Crop setbacks may cause some UK farmers to quit

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. 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.

Annual rises in English farmland prices, according to Knight Frank

2012: +2.7%

2011: +4.2%

2010: +13.3%

2009: +6.8%

2008: +16.2%

2007: +25.3%

This slowed growth for 2012 as a whole to 2.7%, making it the weakest year for price rises since at least 2004.

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.

'Price bounce'

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 department, said.

"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".

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