There is an almost universal belief by farmers that high land prices are beneficial to farming. I contend that high land prices are a curse on farming. I do not deny that some landowning farmers become very rich from high prices, but only when they sell, most of them making more money from selling their farms than they did throughout the time they were farming. There is a clear distinction between what is beneficial to a few farmers and what might be beneficial to farming in general and especially to those who want to farm but have no land.
In Scotland the average price of farmland is more than £4000 per acre and has increased by 17% in the last year. The average price of arable land is £8000 per acre. The market price of land is much more than can be justified by its productive capacity. Taking as an example land for growing wheat which is capable of yielding 3 tonnes per acre:- the current price of wheat ex farm is less than £120 per tonne which gives a gross income of under £360 per acre, the current cost of growing wheat is about £115 per tonne or £345 per acre, leaving a surplus of £15 per acre. Continue reading