William Hargreaves, who leads the rural team at Savills in Suffolk, discusses the agricultural outlook for the year ahead.

The agricultural sector remains a solution to many of the challenges faced by society and is certainly being looked at for meeting many of the environmental targets the government has set. It continues to provide long-term capital growth and recent global conflicts have reinforced the importance of UK land producing food, fuel and fibre. 
Savills’ latest research outlines some key trends for the year:

Prime arable land – Food security remains on the political stage, and the issue is heightened through the impact of global shocks, be that war or extreme weather. Savills forecasts that the flexibility of grade 3 arable land – especially with access to a resilient water supply – could provide the optimum balance of risk; appealing to agricultural buyers for the purpose of growing food, as well investors motivated by nature-based solutions and natural capital.

East Anglian Daily Times: William Hargreaves, who leads the rural team at Savills in SuffolkWilliam Hargreaves, who leads the rural team at Savills in Suffolk (Image: RMG Photography)

Farmland values – Whether funded through private investment or the public purse, farmland values will likely be sustained due to demand from multiple parties. The UK has set targets to achieve net zero carbon emissions by 2050. A key solution will be the sequencing, bundling and stacking of opportunities in the nature markets. This should underpin farmland values and provide the outcomes needed to meet the ever-increasing demands on land.

Changes to funding – As the transition away from the Basic Payment Scheme (BPS) continues, farmers and land managers will need to decide how to move forward. This may include reviewing the opportunities that farmland presents, from food production, development, energy and renewables, through to assessing emerging nature markets or possibly making a decision on retirement or exiting the sector.

Woodland – While the forestry market slowed over 2023, the investment opportunity that land offers as the UK continues to work towards net zero is still significant. The most recent slowdown is likely to be just a temporary blip due to a number of external pressures, with our latest research predicting a return to steady capital growth of 2.5% for 2024.

Renewables – Increasing the UK’s renewable capacity will require the right mix of policy, investment and suitable sites. Strong return on investment will provide adequate incentive to investors (the average return for a solar farm is between 10 and 20%). But policy assurance around developing renewables on certain grades of land is needed, and the liberalisation of onshore wind has also been widely called for. 

Clearly, the agricultural sector has a vital role to play going forward. Farmers and landowners are no strangers to adapting to change – and it will be this spirit of innovation and proactivity that helps them take advantage of the opportunities ahead.

For advice on the rural sector in Suffolk, contact William Hargreaves at Savills on 
01473 234802 or WHargreaves@savills.com