# Transcript

NARRATOR:
East Anglia has some of the best farming land in the United Kingdom, with a wide diversity of crops and some of the largest and most profitable farms. In recent years, a significant shift has taken place in who owns this productive, arable land. Since the global food price crisis of 2007 and 2008, investors from around the world have been acquiring it as a profitable asset. Ben Taylor, a land agent based in Cambridgeshire, has hands-on experience of these recent changes.
BEN TAYLOR:
When I started practice seven years ago, back in 2005, the land market was at around about 3000 pounds an acre for a bit of arable land in where we are now in East Anglia. You could now put that at about 8000 pounds an acre. At the moment, around about 20 per cent of the buyers of farmland are from investment funds or institutional buyers who really are driving up the value.
CHRISTOPHER MILES:
The biggest change is the interest that investors now have in land in this different financial landscape that we’re in, that many of those people wouldn’t have dreamed of going and buying agricultural land because they hadn’t really thought of it as an asset. They’d bought companies. They’d traded shares or whatever. But that’s what’s mostly changed is, they see it is a solid asset.
NARRATOR:
Buyers have been keen to invest, in part because they’ve spotted the gap that’s been growing between the price of agricultural land and what’s classed as development land, generally used for building housing or commercial properties.
CHRISTOPHER MILES:
Land prices were pretty level for many years, up to around about 2005. When the rest of the economy would be doing very well, we saw development land massively increase in value. So the disparity between agricultural land and other assets was growing by the day.
And then suddenly, everyone realised that agricultural land seemed rather cheap compared to a lot of these other assets. So what’s happening in East Anglia with the investors is no different than what’s happening globally. There’s a lot of interest in buying land and for the future of agriculture as a viable business.
NARRATOR:
Increased food demands for a growing world population, as well as the unpredictability of many traditional investment havens, have made this acquisition of land a lucrative investment in almost every country around the world.
CHRISTOPHER MILES:
I think one of the factors that investors recognise - and they’re very savvy people, you know. They’ve made money because they’re not completely stupid. And they are tending to buy the best land that they can get, whether that’s in East Anglia or worldwide. And they’re looking for quality. And they are seeing agriculture as a tangible asset that they can buy and hold, and they’re seeing that the future of agriculture is pretty rosy worldwide with increasing populations.
NARRATOR:
In order to spread risk, international investors often have a portfolio of agricultural land in many different countries. This protects them against regional uncertainties, such as pestilence, political unrest and climatic variations.
BEN TAYLOR:
In terms of the global markets, obviously, the one great uncertainty is weather. And internationally, that can have a huge impact on how productive a country might be. And it only takes one dramatic piece of climate change in a country such as Russia, and all of a sudden, the Russian wheat supply is going to go down. And the natural economic rule is that, therefore, the price is going to go up.
NARRATOR:
Countries which have had a good harvest benefit when the crop fails elsewhere, as demand outstrips supply, pushing up the price. In a global market, affected by the ups and down of weather and harvest, the fact the Britain has a temperate climate and, therefore, offers reliable yields, makes it a safe and attractive bet for international investors.
BEN TAYLOR:
If you’ve got a country such as the UK, which is a very consistent producer with a fairly stable climate in the scheme of things, you’re generally going to benefit when there are international extremities of weather and political change. The UK is seen as, in international terms, as far as Northern Europe is concerned, remarkably good value.
CHRISTOPHER MILES:
Like many industries, farming is a completely global industry now. The commodity prices are linked to not what happens with a crop in East Anglia, as to whether there’s a drought or not. It depends on whether the whole of Russia is in drought or the crop’s frozen or whatever. So the influences are way beyond a British farmer in East Anglia. And that means having to be very efficient in terms of cost of production.
NARRATOR:
This desire for efficiency has led to changes in farming practices, including bigger field sizes and the amalgamation of smaller farms.
CHRISTOPHER MILES:
To make things efficient, you have to have a bigger acreage, in many cases. I’m not saying that all small farmers are inefficient, but that’s the way agriculture is going. The technology, the machinery, the size of the machinery - everything is geared to bigger production - to compete.
BEN TAYLOR:
What you’re seeing is a larger-scale mechanisation coming in. You’re seeing larger kit being used and farming done on a more industrial scale. It’s becoming more of a commercial activity, rather than the more pastoral practice that has been taking place in previous decades.
NARRATOR:
Fewer people are now directly involved in farming land they own. Investors buying up the land are farming at arm’s length.
BEN TAYLOR:
On the most part, investors don’t seek to farm the land themselves. They’d far rather take a contractor on to do it for them. And what we’re seeing is, with more investors coming into the market, they would rather these larger businesses take on the farming for them, rather than leaving it, perhaps, to the smaller-scale farmer that may be the actual person they’re buying the land from.
NARRATOR:
In this scenario, what we think of as traditional, owner-occupied farms are becoming more scarce.
CHRISTOPHER MILES:
A few decades ago, farming was more about lifestyle. It was slightly less of a business. It was more a way of life.
And prices were supported and guaranteed. And they were the days of food mountains, et cetera. People just produced and produced food with no real marketing in mind.
The world’s a very different place now. Farmers have to compete. They have to produce things that people want.
BEN TAYLOR:
With larger-scale farming businesses taking over, you are seeing more blanket cropping happening. You are seeing simpler rotations that are less precise in terms of using every square inch or every part, every different field type. It’s becoming more of a commercial activity, rather than the more pastoral practice that has been taking place in previous decades. And on that basis, you’re seeing mechanisation across the scale and the proliferation of very technologically advanced and very economically aggressive farming businesses coming into the fray.