Land values rise due to restricted supply but long term leasing a more popular choice for landowners
- National average agri-land values in 2018 up 12% in 12 months to €9,910 per acre.
- Leinster per acre land values among the highest at €11,115 followed by Munster at €9,784 and Connaught/Ulster at €6,619.
- One third of farmers are over 65 years old – resulting in poor land mobility transitions
- Farm transfer processes remain a notable concern to achieve a more sustainable agricultural sector
- More auctioneers expect an increase in the volume of farmland to be leased rather than sold
- Outlook for the agricultural sector is reported to be mixed with lower input costs for beef and sheep farming but higher costs for tillage.
The land market in Ireland saw increases in values, on average, of 12% in the past 12 months, with long term leasing becoming more prevalent, particularly for younger entrants to agriculture.
The findings are part of the Annual SCSI/Teagasc Agricultural Land Market Review & Outlook Report 2019, which also looks at land mobility issues within the agricultural sector. The report was launched at the RDS/Teagasc Land Mobility Seminar which examined policy and behavioural initiatives and the changes required for a more productive and sustainable agricultural sector. With 30% of farmers aged 65 years or older, many of whom have no succession plan in place this is a significant concern which featured at the event.
Miah McGrath of SCSI and auctioneer in Munster said that, “the low level of sale transactions in the land market is one of the main reasons why long term leasing is becoming a popular solution for landowners who no longer have a desire to farm all or a portion of the farm”.
The report discusses price volatility and inclement weather challenges and how this has impacted on margins. Despite a challenging 2018, land prices, on average, have increased in value. Farming is a tough business to be in and difficult to sustain growth, however when rare opportunities arise for expanding the farm or buying neighbouring land that has come to market, demand can quickly result in higher prices. Land values are not always directly correlated with farm profits.”
Around the country, per acre land values in Leinster were amongst the highest at €10,946 followed by Munster at €9,373 and Connaught/Ulster at €6,696. The Connaught/Ulster market was particularly busy with 60% of SCSI auctioneers reporting a higher volume of land sold in the region.
The most active class of sellers of agricultural land were executors or those making probate sales. Those who had inherited land but who had no desire to farm it were said to be either very active or somewhat active by 94% of the respondents.
Commenting on the findings, Trevor Donnellan of Teagasc said: “Great work has been done by government in recent years to change the taxation treatment in agriculture to incentivise the transfer of land from one generation to the next. There is however more to be done in this area to further promote the various schemes and incentives to farmers of all ages so that any misconceptions about handing over managerial control or farm asset transfers are addressed at every opportunity”.
On average, 50% of agents reported that the impact of the withdrawal of stamp duty relief has decreased the volume of sales in 2018, with one in four saying that they are ‘not sure’. Overall, 60% of respondents think that drystock farmers will be the type of farmer that is more likely to sell land in 2019, which according to Teagasc results, is one of the less profitable sectors.
For those farmers that are considering their next move, Donnellan explained: “There is sometimes a stigma attached to some farmers whereby having the discussion about what happens the farm in the future is never discussed with family or a successor is never identified. If we are serious about further professionalising the sector, more needs to be done to support and engage with all farmers to help them address these difficult discussions. This can be achieved, not just by Teagasc advisors, but by all other professionals involved in providing advice to farmers such as auctioneers, accountants and solicitors.”
Looking at 2019, Teagasc economists said that Irish finished cattle prices are forecast to decrease by 4% in 2019 relative to 2018, that young cattle prices go down between 3% and 5% but that dairy markets are expected to remain relatively steady following a volatile year. In fact, Irish dairy farm incomes are expected to increase in 2019, due to a forecast reduction in production costs and a continuing increase in milk volume. Lamb prices are expected to be unchanged.