Farmland has a productive decade

The Royal Institution of Chartered Surveyors (Rics) have released their latest survey on farmland and have reported that prices have more than trebled in less than a decade from an average of £2,400 an acre to £7,440 an acre; a rise they describe as “nothing short of staggering”. Sue Steer of Rics said of these findings: “In less than ten years we’ve seen the cost of an acre of farmland grow to such an extent that investors – not just farmers – are entering the market.” Given the recent increase in food commodity prices globally, farmers have been looking to expand their production capacity and at the same time there has emerged a demand from investors, such as pension funds, high- net-worth individuals and sovereign wealth funds for this type of land. As always, there are wide regional variations, with the north-west of England registering the highest increase, with prices rising here by 35% in the last six months alone, to £8,813 an acre. This compares with an average of only £4,438 an acre in Scotland; although this itself is a record price. Rics believe that this price trend will continue throughout 2013, due mainly to lack of supply in the marketplace. Sue Steer, went on to add: “If the relatively tight supply and high demand continues, we could experience the cost per acre going through the £10,000 barrier in the next two to three years.” Although a worrying trend, it is believed that this should not immediately affect the UK cost of food, as normally these are more closely aligned to global production levels and the quality of harvests. Markets (August) (Data supplied by the Outsourced Marketing Department) Geopolitical tensions, especially in Syria, heavily influenced the risk markets, with sentiment turning negative in global equities. The FTSE100 finished the month on 6,417.6 – having touched an intra-month low of 6,390.8 – to record a final loss of 3.07% in August. The FTSE250 followed suit, losing 1.67% and ending on 14,625.2. The junior AIM market fared better, gaining 3.3% to close on 752.61. Elsewhere, the Dow Jones dipped 4.45% finishing the session at 14,810.31, with the Nasdaq also losing 1.01% at 3,589.87. Back in Europe, the Eurostoxx50 ended August on 2,721.37 to record a loss of 1.69%, whilst in Japan the Nikkei 225 faded by 2.05%, closing at 13,388.00. The foreign exchange markets saw some emerging markets currencies under pressure with the Indonesian Rupiah and Indian Rupee seeing heavy depreciations in the month. Sterling did slightly better, gaining a modest 2.3% against the greenback to end August at $1.56 and against the Euro rising 3.25% to €1.18. The Euro itself was unchanged against the dollar at $1.32. On the commodity front, gold almost ventured back into bull market territory, recovering to $1,394.75 an ounce, which represents an 18.2% rise from its recent intra-day low (on June 28th this year) of $1,180 an ounce. Heightened tension in the Middle East, especially Syria, with the threat of military action by a western coalition, returned the precious metal temporarily to its ‘safe-haven’ status. Strongly influenced by these same events, the price of oil spiked, with the Brent Crude benchmark closing August on $114.01 a barrel, a monthly rise of 6.64% and a three-month hike of 13.5%, on fears of diminished supply. Download full report here

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