In the market for farms and estates, there is quite a distinction between the two different prospects. The classic “country estate” has a large, attractive house set in gardens and parkland and several hundred acres of amenity land or farmland. While what we term a “regional farm” is a working farm with the same amount of land but a less spectacular farmhouse and workaday agricultural buildings. Here, we are considering the impact of Brexit on “regional farms” as opposed to rural estates.
Typically, regional farms in the golden counties of Gloucestershire, Wiltshire, Hampshire, Berkshire and Surrey, are likely to be worth a considerable amount more than one found in areas further away from London or less sexy countryside. The reason is simple: they are more likely to attract wealthy lifestyle buyers wanting to convert the farm into their country seat and, better still, if they neighbour existing estates whose owners might be interested in expanding.
The value of farms that fall outside of this “hot zone” — bare arable fields that are typical of farms in East Anglia or less accessible dairy farms in the West Country — will already be less and with the looming changes to the way subsidies are paid as we leave the Common Agricultural Policy, those values could fall considerably.
Farmers, who make up the majority of the buyers of these regional farms, will be looking to see a yield from every acre they acquire. But how can anyone put a value on these acres in this current climate? A high percentage of current profit for farmers comes from the subsidy payments: in 2015, farmers received £3bn in direct payments from Brussels. Currently, farmers are set to receive the existing subsidy rate until 2022. But are these levels of subsidy going to be sustainable when competing against other Government expenditure such as the NHS and schools?
Further, very large and wealthy farms — those well in excess of 1,000 acres — are likely to be somewhat cushioned as they are in a position to lower labour input costs and continue to invest in the latest machinery to keep competitive.
Small and medium sized farms of between 100 and 800 acres, or those with excessive debt, however, are unlikely to have the financial ability to modernise to compete in an environment which isn’t so heavily subsidised. Added to which, the Government has already said that farmers will be rewarded for planting woodland, boosting wildlife, improving water quality and recreating wildflower meadows. That benefits amenity farm owners but less so for working farmers who need to work every acre they can to keep afloat.
Owners of these regional farms might want to consider what the future holds for them beyond 2022. If they decide to throw in the towel and sell up, they may not be alone–and this might get quite uncomfortable in the areas that do not attract the rich weekender.
This may sound depressing but spare a thought for tenant farmers who are trying to survive whilst also paying a rent.