Farmland in Europe: Prices and players from east to west
As part of a our global farmland guide Farmers Weekly asked agents about the farmland market in Europe. Stephen Hall and Wojtek Behnke of the International Agricultural Investments team at Brown & Co, James Cairns of the International Farmland team at Savills, and Ian Monks, head of rural services at Bidwells share their expertise.Â
See also: International farmland – Guide to the global land market
© WestEnd61/REX
GERMANY
Agent
Ian Monks, Bidwells
Main agricultural products
Produces beef, pork, chicken, dairy, wheat, potatoes and sugar. Largest food importer in EU
Average farmland values for good-quality arable land
Farmland values vary between east and west, north and south. The farmland average across all arable land is about £4,700/ acre, but it ranges from £3,100/ acre in eastern Germany to £7,300/ acre in western Germany
See also: Farmland in South America – Large corporates rule the roost
Average farmland values for grassland
Ranges from about £2,000/acre in eastern Germany to £4,800/acre in western Germany
Most desirable farm/land type
Best productive land is in the North, Lower Bavaria and the Magdeburg Borde, the latter two rarely coming to the market. For agri-investment, the best land is in the North and North East where rain is consistent and with close proximity to ports
Quality of land
Range of high-quality arable land principally focused in the central and western plains – lower-quality arable land on the drier eastern steppes and to the higher South, mainly forestry and grazing
Structure of farms
South and West characterised by smaller holdings with an average size of about 110 acres, while in the East there are much larger holdings of about 2,500 acres-plus, with complex ownership structures, predating unification. Mostly small family farms, with fewer larger corporate or private operators
Key factors influencing land market
Strong position in Europe on political, economic and infrastructure/ logistical front. Member of the EU, constant subsidy income. Large and affluent domestic market. Strong ESG leanings. Capital gains to be made from aggregation and convergence in eastern region.
Convergence in capital values between eastern and western Germany continues, but should reach parity in the near future from which point the major differentiator would be soil quality. Increasing ESG regulation proving complicated for some farmers who may look to diversify elsewhere. Managers/owners of former collective farms are reaching retirement.
Players in the farmland market
Market is small – 0.6% of land transacted yearly – with a large proportion of transactions occurring in eastern Germany. Western market is dominated by local players, large-scale parcels rarely come up for sale and demand is generated by local circumstances and neighbours.
Eastern Germany receives much more institutional interest as larger parcels available and more scope for improvement, aggregation and convergence. Highest turnover of land is in the eastern regions of Brandenburg, Mecklenburg and Saxony.
Limits on foreign buyers
No restrictions on foreign land ownership. Increasing concern against institutional ownership over worries of distortions to market.
©FLPA/REX
POLAND
Agent
Wojtek Behnke, Brown & Co
Main agricultural products
Wheat, oilseed rape , rye, apples, blueberries, milk, maize, beef and pork. The new GM ruling with the EU opens the door for significant yield improvements in the coming years.
Average farmland values for good-quality arable land
Depending on region, it can range from about £1,000/ acre in the North East to about £3,500/ acre in the centre of the country, both for state sales. But from £1,200-£4,400/ acre for private sales.Â
Average farmland values for grassland
It varies between regions, but ranges from about £220/ acre in the South West to about £930/ acre in the North East for state sales and £290-£1,200/ acre for private sales.Â
Most desirable farm/land type
Ring-fenced contiguous blocks of arable land from about 1,200-3,700 acres with modern crop storage and infrastructure or well-constructed land portfolios of about 12,400 acres and bigger. The local market is mostly for plots of 120-370 acres. There is increasingly a Polish farmer interest for larger land areas, but generally for leaseholds.
Quality of land
Land varies from fenland peaty silt soils in the delta regions to heavy clays in the North East and lighter sandy soils in the West. In general the land is light and sandy. This soil type can be easily improved through better husbandry and with an abundance of ground water there are plenty of irrigation options.
Structure of farms:
Mostly small family farms, with larger corporate or private operators fewer in number. A growing number of medium-sized farms.
Key factors influencing land market
Poland is one of the top-performing EU countries with a good recent history of strong economic indicators and a proven track record of GDP growth. The legal and political systems are both stable and mature.
Poland has a long history of individual property rights, even through the communist era and therefore this sector is well developed.There is no profit tax to pay for a farming business in Poland. There is a land area-based tax which is about £9/ acre.
Poland’s former prime minister is now head of the European Council, a recent move that has further bolstered the country’s presence on the international stage. Presidential elections take place this year, but the incumbent president is likely to remain in power. Modernisation, improvement of economic competitiveness and close co-operation with the European Union and Nato are the main focus of his campaign.
Players in the farmland market
A strong domestic market at both corporate and farmer level. Domestic and international investors continue to show interest in the market and speculation has firmed prices in the past 12 months. The state is still the largest land owner, but has accelerated its drive to dispose of land in recent years – a trend that is likely to continue.
Limits on foreign buyers
As of 1 January 2015, EU citizens are entitled to purchase agricultural land in Poland. Up until this time foreign buyers have been able to own up to 100% of the shares in a farming business or lease land from either private individuals or the state.
© Cultura/REX
UKRAINE
Agent
Wojtek Behnke, Brown & Co
Main agricultural products
Wheat, barley, OSR, maize, vegetables, dairy, livestock, poultry, pork
Average farmland values for good-quality arable land
Ranges from about £80-£360/ acre.
Average farmland values for grassland
There is no land market for grassland.Â
Most desirable farm/ land type
Extensive arable units in a single block. Well located on major arterial routes and with some general storage buildings.
Quality of land
Most of the region’s Chernozem soils are within Ukraine. Land varies from light to heavy and farmed to unfarmed. Generally most land has significantly high production potential.
Structure of farms
Predominantly corporate large-scale farmers. At the other end of the scale are very small subsidence farmers.
Key factors influencing land market
Highly fertile land and climate conducive to agriculture. Weak governance and instability has resulted in current geopolitical conflict. Land is either state-owned or divided among locals into small parcels of about 2.5 acres. It is not possible to buy land in Ukraine – the land can only be leased or the right to lease the land can be acquired.
The state is a big player in the whole land market. Many legal cases are dealt with over land right issues and distribution of land. Current government has hinted at relaxing state controls, but no recent evidence of this.
Players in the farmland market
The market is dominated by corporate farming business, either domestic or international. Many very small-scale peasant farms exist.
Limits on foreign buyers
There is a moratorium on land ownership.
© Image Broker/REX
ROMANIA
Agent
James Cairns, Savills
Main agricultural products
Wheat, corn, soya
Average farmland values for good-quality arable land
About £1,500/acre for good dryland, or £2,800/acre for good irrigated land
Average farmland values for grassland
£600/acre
Most desirable farm/land type
High-quality irrigated cropland on alluvial soil
Quality of land
Varies hugely from very fertile soil on river floodplains to dry, poor and mountainous land suitable for forestry
Structure of farms
Commercial farms often a mix of freehold and leasehold aggregations, with acquisition an ongoing process. Farms often run in-hand by corporate farmers
Key factors influencing land market
Lease and freehold aggregation and therefore relative land title security, irrigation capacity, rainfall, soil quality, scale of land in freehold over leasehold, effect of Russian threat, infrastructure and access to market, crop and input prices, good labour/management
Players in the farmland market
In the commercial farmland market there are corporate agribusiness and investment backed by UK, German, Dutch, French, Italian investors with competition from large Romanian farmers. A two-tier market with local farmers and some larger players
Limits on foreign buyers
Legally there are no restriction since 1 January 2015 – foreign citizens are now able to buy land under EU Treaty of Accession. In practice it is still challenging to acquire large aggregations and operate completely freely in RomaniaÂ
© opress Photo Agency/REX
HUNGARY
Agent
James Cairns, Savills
Main agricultural products
Wheat, maize, sunflower potatoes, sugar beet, dairy and cattle
Average farmland values for good-quality arable land:
£1,100/acre for dryland
Average farmland values for grassland
No significant market for grassland
Most desirable farm/land type
Good arable land
Quality of land
Mix of farming operations. There are some highly fertile soils depending on where they are located
Structure of farms
Mix of small-plot family farms from 20-100 acres and corporate operations range from 7,400-12,400 acres/aggregation. Corporate farmland accounts for less than 2% of all Hungarian land ownership
Key factors influencing land market
Foreign ownership restrictions, land title security, corporate structures, rainfall, soil quality, scale of land in freehold over leasehold, effect of Russian threat and allegiance with Hungary, subsidy security, exchange rate infrastructure and access to market, good labour/management and tenancy covenant strength
Players in the farmland market
The majority of the market are local domestic farmers who own small farm plots, but there are some high-level corporate farming enterprises. Foregin ownership is limited due to political restrictions, but there are some UK and European corporate farmers operating large farms
Limits on foreign buyers
Hungary does have farmland foreign direct investment restrictions, however there are various vehicles and structures to enable agricultural investment such as purchasing shares of the majority ownership of a farming company
© FLPA / Angela Hampton/REX
UK
Agent
Stephen Hall, Brown & Co
Main agricultural products
Wheat, barley, OSR, dairy, poultry, beef, pork and energy crops
Average farmland values for good-quality arable land
Ranges from about £7,000/ acre in Wales and south-west England to about £15,000 in the east of England
Average farmland values for grassland
Ranges from about £5,000/ acre in the north, south-west and west of England, Wales and Scotland to about £9,000/ acre in the south-west of EnglandÂ
Most desirable farm/land type
Large arable units, well equipped with minimal residential element. Strong land market with interest from farmers, amenity buyers, property developers, institutional and corporate investors
Quality of land
As a generalisation, high-quality arable land in the East with occasional double-cropping silts. Highly-productive grassland in the West. Maritime climate allows for mixed conditions and a range of farming practices across the board
Structure of farms
Variable in size with a mix from small to large family farms, contract, corporate and tenant farmers
Key factors influencing land market
Advanced western state with developed markets. Positive political and economic conditions for property ownership. Established legal system for land law and landlord and tenant relationships. Incentivised tax benefits for land ownership. Subsidy support systems through European Union
Free market economic approach with minimal state interference in the land market. High levels of support to businesses and encouraging towards entrepreneurship, diversification and investment.
Players in the farmland market
Still majority driven by farmers, however prices also driven by tax purchasers (both inheritance tax and capital gains tax). Institutional investors also make up some of the buyers
Limits on foreign buyers
None