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Last Updated: Friday, 23 February 2007, 03:49 GMT
'Record price rises' for farmland
City bonuses have contributed to the price rises
The cost of farmland is rising at record levels, a report says.

High City bonuses and strong commodity prices have resulted in demand for land far outstripping supply, the Royal Institute of Chartered Surveyors said.

Farmland prices rose by 18% to an average of 8,164 per hectare in the second half of last year, which was three times the rate of the first half.

The National Farmers Union welcomed the news but some fear it will make it hard for young people to enter the industry.

Analysts say strengthening commodity prices means the pressure to sell farmland has reduced.

And, at the same time, more farmers are looking to increase production.

Increased demand

Other buyers include well-paid people from cities seeking a change of lifestyle.

Meanwhile, foreign farmers - notably ones from Ireland and Denmark - have been attracted to the UK due to the high prices in their own countries.

The average cost of farmland rose to 8,164 per hectare in the second half of last year.

This was up from about 6,900 for the same period of 2006.

Sue Steer, an RICS spokeswoman, said: "High commodity prices have resulted in a huge increase in demand as farmers compete with non-farming money for land.

"However, availability of land has slipped back as strong commodity prices has led to a sense of renewed optimism in agriculture and reduced the financial pressure on farmers to sell, despite interest rates."

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