Anyone who wants to run a farm needs land—and in the Netherlands, farmland is becoming increasingly scarce. It's not just farmers competing for land: housing, industry and nature conservation are all competing for the same plots. This pushes prices up. So, can young farmers still afford to take over the family farm? And are high land prices standing in the way of more sustainable farming practices? We asked land price expert Jop Woltjer to explain.
Farmland in the Netherlands is in short supply, while demand continues to grow. That demand comes not only from the agricultural sector, but also from housing, infrastructure, business parks and renewable energy projects.
The value of land also depends on what it can yield financially-its 'earning capacity'. This in turn is affected by technological advancements, increasingly intensive land use, and the prices farmers receive for their produce.
Interest rates and public policy also play a role. Low interest rates make it cheaper to finance land purchases, which pushes up prices. Government buyouts for housing or nature conservation projects have the same effect. Because of the gradual phase-out of derogation, dairy farmers are seeking more land, which also drives up prices. However, policy can work the other way as well. Programmes encouraging farmers to exit the sector may, in time, release additional land onto the market, which could ease prices.
So, for farmers, rising land prices are a double-edged sword: the value of their assets increases, but expansion becomes more expensive and difficult.
2. Competition in the land market is increasing; other players such as investors are also buying up land. How do you see this trend developing?
It's difficult to predict how this trend will evolve, and it varies greatly by region. Demand for land for housing or nature development is often highly local. When farmland is rezoned, for instance to residential use, its value can increase tenfold. This makes speculation attractive, even if it only applies to a small part of the land market.
Over the past few decades, land has proven to be a stable investment. Investing in farmland that is leased out and at the same time increases in value is appealing. Farmers themselves often reinvest profits into land, especially now that uncertainties-such as around nitrogen policies-make alternative investments such as in barns or machinery riskier.
3. Can young farmers still afford to buy or lease land, or has it become unaffordable?
Young people are still starting farms, so it's not entirely unaffordable. However, high land prices do make it harder to secure financing. Within families, land is often transferred below market value to avoid saddling the next generation with large debts. Young farmers without a family farm face a significant challenge, which may deter them from entering the sector at all.
Leasing is an alternative, but lease prices are also rising. Regular long-term leases are subject to statutory maximums designed to keep costs in line with the land's earning capacity. However, new contracts are often signed outside of these rules, partly because those regulated options are less attractive for landowners.
4. Are land and lease prices an obstacle to extensification and sustainability?
Yes, high prices make it harder to make sustainable farming economically viable. Extensive farming generally yields a lower return per hectare, making it harder to secure financing from banks for land purchases. That said, sustainability can also unlock opportunities. Some banks and investors are more willing to back farms with a future-proof, sustainable business model.
This is evident in initiatives like Land van Ons or a.s.r., which support sustainable farmers through lower lease rates or discounts on land tenure. Such socially driven land use models make sustainability more attainable.
5. What role should the government play?
Direct market interventions-such as capping land prices-often backfire. They can lead to shortages and inefficient allocation, as we also see in the regulated rental housing market.
Nonetheless, the government does have an important role to play. First and foremost: greater clarity-for example, regarding nitrogen policy. If farmers are unsure of what the future holds, they delay investment and prefer to put their money into land instead, which further inflates prices.
Active land policy can also help. Clear guidelines on where space is available for agriculture, nature or housing reduce uncertainty and curb speculation. Authorities should also critically examine their own land holdings and acquisition policies. Large government purchases for nature conservation can significantly increase local farmland prices, which is often undesirable.
Lastly, the leasing system needs to be reviewed. Farmers who cannot afford to buy land must still be able to lease it long-term and under fair conditions. The government is currently in talks with stakeholders to address this.
To develop effective policies, we need a better understanding of how land prices are formed. What is driving the continued rise in prices? What does this mean for the profitability of, for example, nature-inclusive or extensive farming? And how well does the available land actually match the goals we aim to achieve?
Further research into these questions is essential. It helps policymakers gain deeper insight into how policy measures-such as area-based approaches or nitrogen regulations-affect land prices. This allows them to set more realistic goals, anticipate risks of price inflation or displacement, and design more effective and affordable policy instruments.
