'UNPRECEDENTED PRICES' were paid for Scottish hill ground suitable for tree planting in 2019.

According to rural estate agent Strutt and Parker, in some cases, plantable hill ground attracted prices on a par with secondary arable farms and grass leys, reaching a high of close to £3000/acre – compared to £2000/acre in 2018.

Commenting on the firm's annual analysis of the Scottish farmland market's performance, garm agent Diane Fleming said: “The increase in demand for hill farms and the prices paid have made it almost impossible for hill farmers to compete for land which has commercial forestry planting potential.

"Forestry investors consistently outweighed the bidding power of farmers. The agricultural value of hill ground when unsuitable for forestry planting sits between £300 and £1000 per acre, depending on its location,” she noted.

The dominance of the forestry sector aligns with John Clegg and Co’s Forest Market Report – largely examining sales of established commercial forestry plantations – which details a robust year for forestry, with a 23% year-on-year rise in average forestry values, a 21% increase in the total value of the market and commercial forestry transactions worth £126.5m.

Strutt and Parker reported that the 2019 farmland market held up 'remarkably well', with demand outstripping supply for prime arable farmland; best-in-class arable reached £16,000/acre in one example, on a par with equivalent English farms.

A total of 100 farms were marketed in Scotland last year, in line with the five-year average of 102, and Scottish farmers made up the majority of purchasers for all farmland – bar the hill ground attracting forestry buyers.

In a significant shift, small livestock farms made up the biggest share (49%) of the farmland market compared to 2018 when arable was dominant. There was a reduction in size of the farms available with a limited supply of farms over 500 acres and just three farms exceeding 1000 acres. Half of the livestock farms were under 200 acres in size.

Pasture values softened slightly to £2500 - £5250/acre paid for grass leys and £1000 - £2500/acre paid for permanent pasture.

While the overall acreage on the market decreased by 32% year-on-year to 30,800, the difference is exaggerated by 2018’s record-breaking year, when more land hit the market than in any year in the preceding decade.

The drop in acreage was not as stark as the 40% reduction witnessed south of the border, where the supply of farmland on the market was the lowest for a decade.

Of the farms launched during the year, 56% of farms successfully found a buyer by early December, a similar level to 2018. Over the last two years, 90% of farms sold at or above their asking price.

Miss Fleming said: “The restricted availability of arable land for sale helped to reinforce arable values. Yet the prices paid for more marginal land, livestock farms and dairy farms declined slightly on a per acre basis, due to supply exceeding demand in some areas and a lack of confidence from buyers in the market.”

She said retirement continued to be the main sales driver and that a third of farmers chose to sell due to the absence of willing successors within their family.

“This is a continuing trend and more obvious in areas of lower productivity where the prospect of farming is less appealing to the next generation. Other reasons included release of capital, a career change, purchase of higher quality land elsewhere, relocation, non-farming owners wishing to re-invest in other asset classes and non-UK owners worried about Brexit.”

She added: “There is no doubt that 2019 was a difficult year for the agricultural industry. However, the farmland market has held up well and we remain confident that it will continue to perform in 2020.”