The company believes the focus on cereal crops has the advantage of catering for the demand for food and potentially bio-fuel production. Growth in UK farming profits and land values has been driven by factors that the company feels are sustainable in the long term, such as global population growth and an increase in food consumption.
Bio-fuel present only potential opportunities for the fund as two bio-ethanol plants in the UK are not yet in production. They will need two million tons of wheat feed when fully operational, but until this happens there is no demand in the UK for the use of cereal cops for bio-fuel production.
Estate agent Chesterton Humberts, which has experience in farm and rural finance has been appointed by the company to find suitable land The directors of UK Farming will work closely with farming contractors to determine the most appropriate mix of crops each year and to agree farming budgets.
The proceeds from the offer will be held on deposit until suitable buildings and land have been identified. Estate agent Savills, which predicts a 36 per cent increase in the average value of farmland in the five years from 2012 in its Agricultural Land Markets Survey 2012, will independently value each acquisition on a quarterly basis.
As an early stage company, this is a higher risk investment. The company intends to establish farming as a qualifying trade for business property relief, which would enable investors to shelter their investment from IHT. However, advance clearance from HMRC has not been obtained on this point, so there is no guarantee that IHT relief will apply.