In May I wrote that the traditional selling season for farms in Scotland had been delayed by the unusually prolonged winter and was running about six weeks behind its usual schedule, with the result that it was very difficult to gauge the strength and depth of the market at that point.
So five months on what has actually happened?
The farm agent’s year is not so different to the farmer’s year in that the success of our efforts can often only be judged at the year’s end.
We can only reap what we sow, there are very fine margins between success and failure; and a number of factors over which we have no control can dictate whether our year is a vintage one or an annus horribilis.
In the months between October and May in a typical year, when an arable farmer will be selling grain and nurturing winter and spring crops or a livestock farmer will be selling store or prime stock, the farm agent will be trying to sell any remaining farms left on his books while also working to win sales instructions for the following year.
The success of a farmer’s year relies on clement climatic and ground conditions to produce a satisfactory yield and then reasonable market conditions to ensure that a fair price is paid for the produce.
The same pattern is applied to the farm agency year.
The success of our year depends on winning sufficient sales instructions in the winter or spring to have a decent ‘book’ of sales for the May to October selling season.
The next challenge is identifying the buyers and attracting acceptable offers.
Before our “yield” is confirmed, we rely on (are at the mercy of) our colleagues in the legal profession to guide the sale to a concluded missive whereupon we can release our bated breath and enjoy a fleeting sigh of relief before promptly rendering our fee note.
As with farming, there are numerous challenges affecting our ability to produce a ‘crop’ and even having done so, we are reliant on market forces beyond our control dictating the value and strength of market for our crop.
So, if farming has had a mixed bag of a year with grain prices strong but yields poor and livestock prices solid but input costs high, how has the farmland market fared?
At Strutt & Parker, we have offered 17 farms for sale in Scotland during 2013 at a total of 8,764 acres which averages out at 515 acres per farm.
The combined total asking price for these farms of ‘offers over £30,511,000’ equates to an average of £1,795,000 per farm.
These have varied in nature and geography from hill farms on the Mull of Kintyre to commercial arable units in Easter Ross.
The fact that just three of these farms remain for sale, of which two were launched earlier this month, demonstrates that the market is open and trade is taking place.
Prime arable land is still at its highest level ever in Scotland at up to, and occasionally over, £10,000 per acre, mixed units are in high demand and the hill farm market remains bolstered by those with non-agricultural interests like renewable energy, tree planting and field sports.
It would be insincere, however, not to introduce a cautionary note to what appears a rosy picture from the putative seller’s perspective if not from that of the buyer or new entrant.
The reality is that while the stats read well, the reality is that the market remains shallow in depth.
While many of our sales were closed out via the traditional closing date route, in most cases, just a couple of offers were received and not the five, six or seven offers which were commonplace in the mid noughties.
Market sentiment is more fragile than published figures would suggest and with the Independence referendum and CAP reform on the horizon coupled with the near certainty of rising interest rates, this is likely to remain so.
It is for this reason that the widely publicised lotted sale of the Kinpurnie Estate around the village of Newtyle in Angus is an interesting sale to observe.
With a top-grade arable farm, six mixed units, a sporting estate and several blocks of bare land being offered for sale simultaneously together with a number of residential properties and development opportunities, the local land market has a lot to chew on and the outcome of this sale will be the dictum of the real strength in depth of the Scottish farmland market.
Rob McCulloch is a partner in the estate and farm sales and valuations team of Strutt & Parker based in Edinburgh.