Investing in the Future of Your Farm

Last week saw the second of two seminars here in the West Country, run by Old Mill accountants based in Shepton Mallet and Carter Jonas, a national property consultancy based locally in Wells and Bath. Both seminars were sponsored by the Agricultural Mortgage Corporation (AMC) and supported locally by the Royal Bath and West of England Society who also hosted the first event at the Showground.The seminars were entitled “Investing in the Future of Your Farm” and both attracted over 100 farmers which only goes to show how eager they were to hear what the speakers had to say, or perhaps the free supper afterwards was also a bit of a draw! But whatever the motivation for attending I don’t think many left disappointed.

Kit Harding, Partner at Carter Jonas opened the meetings with a talk on the market for agricultural land which, unlike the residential property market remains extremely strong, being driven largely by scarcity and increasing farm profitability.

The scarcity factor was brought home particularly starkly by one slide that showed the area of farmland sold annually has fallen steadily since the war and at about 120,000 acres being predicted for 2011, this is little more than 10% of what was sold in the late 1940s. Thus it is no wonder prices have risen, especially in these uncertain times when anyone with cash is looking for a secure investment and farmland seems to fit that description.

Further, farmland makes an attractive investment because it can attract 100% inheritance tax relief which is one of the reasons why farmers when they retire, tend not to sell their land preferring to retain it and let it out. This contributes to the scarcity of supply which is made worse by the very obvious point that “they are not making any more of it”.

Jonathon Day, new regional manager for the AMC in the South West chaired one of the meetings and said there was cautious optimism in the farming industry. He commented, "Commodity prices are the best for a while and it has been a record summer for investment and although CAP reform is on the horizon there is some reason for confidence".

Farmers intending to stay in the industry for the long haul also heard from other specialists, Pat Tomlinson, associate director at Old Mill, and Mike Butler, head of rural services at Old Mill both of whom gave excellent speeches.

Pat, who was until recently head of the agricultural team at HSBC gave an excellent insight in to the banking sector and explained the importance of presenting one’s case to the banks very carefully because although they have money to lend they are looking at all applications for loans very carefully.

Mike then went on to examine various taxation issues and in particular the advantages of a corporate structure as compared to being a sole trader or partnership where one cannot take advantage of the comparatively low rates of corporation tax.

All in all it seems the attendees left satisfied, having both food for thought and food for the stomach.

James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk