| Farming has not had the best press of late. A quick search on any news website reveals a host of stories pointing out the woes of the agricultural community. For example, a report by Deloitte & Touche last month indicated that the incomes of British farmers had dropped by a fifth in the past year. The average lowland farmer currently earns £66 per acre of land, compared to £81 last year. The consultancy firm predicted that this figure would drop to £62 per acre next year, mainly as a result of declining subsidies.  | | FARMING IS A LIFESTYLE CHOICE | Some in the agriculture industry claim that the increasing dominance of supermarkets on the High Street means that they can force down prices from suppliers, in effect passing reductions in consumer prices onto them. And with a price war looming between the grocery giants, this problem if true could intensify. According to LS Planning Consultants, values for good arable land are around £3,000 per acre. For dairy farms, this is slightly lower, depending on region. For the increasingly marginal hill farms however, values are less than £1,000 per acre, except in Scotland, Yorkshire and Northern Ireland. Based on a typical lowland arable farm, these figures mean it would take an investor almost 50 years to recoup the cost of the land. Escaping the pressure Bearing this in mind, it is no surprise that buying a farm is attractive to the 'lifestyle' buyer, rather than the serious businessman who sees growing food purely as a way to make money. In the more marginal areas away from the 'agribusiness' heartlands of Lincolnshire and Norfolk, where volume crops are grown at profit, running a small farm is increasingly the preserve of the affluent urban dweller wanting to escape from the pressures of city life. According to property consultancy Savills, 'lifestyle buyers' accounted for around 40% of all transactions in 2004, with farmers accounting for 42% and corporate institutions and investors the remainder. They claim that there is still a shortage of supply, meaning that last year the average value rose by 16% – making professional farming an even less viable occupation for the entrepreneur. Unfortunately, there is more bad news. Most of this land was in the more marginal agricultural areas. The market in the farming heartlands of the East of England is severely restricted and land rarely comes up for sale. If you are dreaming of an unending idyll, consider the words of one-time American president Dwight E. Eisenhower: "Farming looks mighty easy when your plow is a pencil, and you are a thousand miles from the corn field." It involves early mornings, long hours and hard physical labour, often in the wet and the cold, particularly given the UK’s volatile weather. Of course, for many people, farming and the pleasures of the rural life are a passion, and as long as a living can be eked out, the opportunity is worth pursuing. But is it still possible to make a profit from farming? Profitability is still good Contrary to all the publicity, Savills claim that profitability in the sector is still good, although warn: "Average farm incomes are likely to fall in sectors over the next few years", particularly in the dairy sector, as the current subsidy formula is replaced by the new regime that has emerged from the EU’s mid-term review. In addition, farmers will have to restructure to take advantage of the new subsidies, but making money is still possible – although whether this applies to new entrants is a different matter. For the numbers to make sense, except in the most viable locations, potential new farmers will have to consider the long-term picture. While increasing international trade and consumer pressure is driving down prices for 'commodity' goods, the speciality market is growing enormously. Interest in high-quality, locally-produced goods is growing steadily. Far more people are taking an interest in where food is grown and how it is farmed. A stroll down any reasonably affluent High Street in Britain will reveal increasing interest in high-quality, free-range meats and vegetables. The success of the Duchy brand, the Prince Charles-backed company that specialises in English food grown traditionally, is a prime example of this. The export market is picking up too. According to Food from Britain, the export market grew by 10% in 2003, falling just short of the £10bn mark at £9.8bn. However, none of this matches the growth of the organic food market. It is now worth £1.2bn, an 11% increase on the 2004 figure. The amount of farmland catering for the demand – which manifests itself as farmers markets as well as in increased visibility in conventional shops – now stands at 1.5m acres, and has increased by 0.6% over the previous 12 months. This might not seem huge, but there has been a 10.7% increase in the amount of 'in-conversion' land (land must have been managed organically for a while before it qualifies). This suggests that more and more farmers are seeing the financial wisdom in converting to this market, even if only partially. Of course, you don’t have to go organic to make money, but it does seem that for the more modest farmer, 'niche' sectors and high-quality products are the way forward if you really want to make ends meet.
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