Property

Shortage of warehouse space fuels opportunities for farmers

• Good road access highly desirable • Online shopping driving demand • Opportunities for smaller farmers

Eastern region farmers are well positioned to take advantage of a rise in demand for warehouse space, say land agents.

The growth of online shopping sparked by the pandemic and more frequent parcel deliveries are fuelling the need for storage in more rural and semi-rural locations, say rural advisors Savills.

There has been an increase in the number of logistics companies looking for buildings to store goods as they roll off container ships at the Port of Felixstowe – making locations off the A14, A12, A140 and A11 highly desirable.

Savills Suffolk head of rural management Michael Horton said: “Traditionally the logistics sector has been long haul. Goods come off the container ships at the Port of Felixstowe and then get taken to the Midlands.

Next day delivery

“However with the coronavirus pandemic increasing people’s willingness to shop online – and with many goods now expected to be delivered the next day – that picture has changed.”

The past 18 months had seen increasing demand for sites that are much closer to home along key arterial routes, Mr Horton told a recent seminar attended by local farmers and landowners.

With some 46% of UK container traffic coming through Felixstowe, there were new opportunities for farmers, he said. This included developing old agricultural buildings that were currently sitting empty. “Typically we are seeing returns of up to £8 a square foot, whereas a few years ago it was perhaps more like £4 or £5 a square foot. People are unlikely to change their shopping habits anytime soon, so we don’t anticipate that this demand will fall away.”

Almost half of all f UK container traffic comes through Felixstowe

Companies are looking for buildings to store goods.

Edward Fitzalan- Howard (pictured), from the rural management team at Savills Norfolk, said even farmers with a smaller space may have opportunities – not just landowners with larger scale commercial warehouse storage.

“Local businesses often need somewhere to store archive materials for example, or disused agricultural buildings could be converted into self-storage facilities,” said Mr Fitzalan-Howard.

“The change in people’s working patterns as a result of the pandemic has also opened up a really interesting opportunity around diversifying and creating small scale business parks and flexible office space suitable for hot desking.”

Mr Fitzalan-Howard said this would cater for employees and business people who only commuted to the office once or twice a week but didn’t necessarily have space to work from home for the rest of the time.

Land prices hit highest level since 2018

Average prices for arable farmland in England reached £9,700 per acre in the third quarter of 2021 – the highest quarterly average since early 2018.

This rise reflects historically low levels of supply in the marketplace, combined with firm demand from a range of buyers, according to land agents Strutt & Parker. It shows that fewer than 10,000 acres came to the market in Q3 2021.

This represents about half the amount of land typically offered for sale. It takes the total amount of land coming on to the market to 48,100 acres so far in 2021 – compared to 48,200 acres at the same point in 2020.

The reduction in area can be partly attributed to the private market being active, says Strutt & Parker. It estimates that private sales currently account for about 25% of the market nationally, and up to 40% in some regions.

In some areas, there are virtually no farms left unsold because demand continues to outstrip supply. Such is the strength of demand that every farm over 500 acres marketed in the first half of 2021 has already sold or is under offer.

The average value of arable land for the whole of 2021 nationally is £9,200 per acre, which has been the average since 2017. Prices for vacant arable land in East Anglia during the third quarter of 2021 ranged from £7,500 to £10,250 per acre.

How to make surplus BPS cash work for you

Farmers receiving Basic Payment Scheme (BPS) payments could make their money work harder with the help of a new agricultural savings account.

More than £1.7bn of BPS money has just landed in the bank accounts of 97,500 farming claimants, according to the Rural Payments Agency. But much of it will go straight into current accounts – with little or no return achieved.

Farmers could instead increase their return by investing surplus BPS cash in a savings account which also offers flexibility to access funds when needed, suggests Nick Evans, managing director at Oxbury Bank.

“We know cash flow is really important to farming businesses, and this often puts farmers off from investing their money into savings accounts. That’s why we’ve launched a new Farm Business Bonus 5-Day Notice Account.”

The account allows farm businesses to make short-term returns on their cash with a five-day notice period to access funds. It offers an interest rate of 0.71%, which includes a 0.36% bonus for active farmers.

Every penny saved is lent to farmers and the rural economy, with deposits raised to support its pipeline of farm loans. The latest account is the third farm business bonus notice account to be offered by Oxbury.

Bond account

The other accounts offer a 0.86% interest rate with a 35-day notice period and 0.96% interest rate with a 95-day notice period. There is also a one-year Bond Account offering an interest rate of 1.26%. All accounts offer bonus interest to farmers.

Oxbury Bank received its banking licence in 2020. Founded by farmers, agricultural distributors and technical experts, it is targeting an 8% share of all farm lending within five years – in a sector where the big four High Street banks have 70% of the market.

Nick Evans: Lending to farmers

The Future Farming Resilience Fund – agriculture support

The Future Farming Resilience Fund, launched to support the transition within agriculture, has three phases, however, it’s the current interim phase, (August 2021 until spring 2022), that farmers and landowners must be aware of.

To qualify during this phase, farmers and landowners must currently be in receipt of Basic Payment Scheme (BPS). A key point to consider is that this is fully government funded, and it’s free of charge.

The £10.7m fund is being delivered in different ways, with many providers offering a tailored approach, including farm visits and detailed financial and professional advice, individual to each business.

In order to put themselves forward, farmers and landowners will need to contact one of the approved firms as outlined on the GOV.UK website. Firms outline their individual approaches, which may be adaptable subject to your business requirements.

As part of the participation, expect a farm visit to enable the consultant to understand you, your business, current challenges, and what opportunities may exist. You must prepare, as business owners or managers are required to produce a variety of financial, cropping and environmental data to give the advisors the clearest picture of the business.

The aim is to enable advisors to review and scrutinise businesses, to identify opportunities for change, diversification, and possible ways to adapt and produce greater output. The output improvement may be through change of tillage options, review of machinery requirements, reduction in horsepower to achieve the same result, or crop rotation changes for enhancing soil health and biodiversity. Expect a variety of recommendations personalised to your business.

BPS payments begin to taper this year with the smallest and final payment in 2027. With further challenges also facing UK agriculture in 2021, the NFU is calling for a delay in the reductions to BPS for 2022 and 2023, as it does not consider the future policy for farming in the UK to be robust enough. The NFU is not requesting that the 2021 reduction be postponed; this will continue as planned.

All farmers and landowners should be preparing and budgeting on the basis that the BPS reductions will continue to 2024, with future reductions through to 2027 expected to be much steeper. The Future Farming Resilience Fund reports will be based on a reduction to no BPS by 2028.

We would encourage all farmers and landowners to get involved in the scheme, review their business and prepare for the future.

This article is designed for the information of readers. Whilst every effort is made to ensure accuracy, information contained in this article may not be comprehensive and recipients should not act upon it without seeking professional advice. Laurie Hill

Need help?

You can contact one of our specialists by calling 0330 024 0888 or email enquiry@larking-gowen.co.uk