21 Oct 2019

How big is the average farm?

MHA Monahans How Big is the Average Farm

It is a commonly quoted fact that the number of farms in the UK is shrinking, whilst the average size is increasing. Certainly between 1950 and 2005, the number of holdings in the UK dropped by 55%, which equates to about 1% per annum.

Overall, the average farm size across the country continues to be a surprisingly modest 86.4 Ha (213 acres); little changed since 2010 when it was 84.3 Ha (208 acres). However, the more meaningful statistic is that, even ignoring the effect of contracting agreements, 54% of the country is farmed by the largest 11,300 holdings which have an average size of 434Ha (1072 acres), up from 976 acres 9 years ago.

The latest DEFRA statistics on farm size show that the pattern has changed very slightly over the last nine years, and has produced some anomalies. Certainly the slow process of aggregation amongst the larger holdings has continued, with a reduction of about 6% in the number of holdings between 20 and 50 Ha, and slightly larger reductions in the number of holdings between 50 and 200 Ha, (although in each case the average holding size remained substantially unchanged). Only the largest category, those holdings above 200 Ha, showed increases in both number (rising from 10,800 to 11,300) and average size which increased from 395 Ha to 434 Ha. To this extent, the findings of the report are largely as expected.

Looking at the overall picture, however, there are a couple of surprises. Firstly, whilst the average holding size across the country increased by 2.5%, the number of holdings in England also increased by about 600. Secondly, looking at the lowest size bracket, below 20 Ha, the number of holdings increased by 11% although the average size dropped by 17.6%

This growth of smaller holdings is puzzling and there is no immediate answer. Circumstantial evidence suggests that there will be a combination of factors including:

  • Medium sized farms selling bare land to neighbours, but retaining or selling separately the house and a reduced acreage, thus keeping the holding but reducing its size
  • Outside investors acquiring parcels of bare land and registering a new holding, whilst the land is farmed by neighbours under contracting arrangements
  • The division of medium sized farms between children, where there is no full succession and each child registers a holding, whilst the land is farmed by neighbours as above.

If you would like to discuss succession planning or farm business structuring, please contact me or Richard Brooks our private client tax partner.