SCSI/Teagasc Agricultural Land Market Review and Outlook Report 2021
The main findings:
- Land prices forecast to rise by 4% on average in 2021
- National average non-residential prices ranged from €5,900 per acre for poor quality to €9,381 for good land in 2020
- The most expensive land was in Kildare where good quality land fetched an average of €13,600 per acre
- The cheapest was in Leitrim where poor quality land was valued at an average of €3,250 per acre
- Land rental price increases of 8% are predicted for Leinster this year while the figures are 5% and 6% for Munster and Connacht
- While Covid had minimal impact on agricultural commodity prices, public health restrictions on viewings and auctions have led to deferral of land sales
- Chartered Surveyors say land prices have remained resilient, underpinned by strong demand and lower sales activity despite the uncertainties caused by Covid
- Land values have also been underpinned by a rise in farm incomes - the report estimates average farm incomes increased by 6% last year and predicts they’ll rise by average of 3% in 2021
Tuesday 20th April 2021. SCSI auctioneers and valuers say land prices remained resilient last year despite the threat posed by Covid and are predicted to rise by 4% on average this year, underpinned by a rise in farm incomes as well as strong demand and reduced supply.
In a major new survey, auctioneers, valuers and chartered surveyors operating in the agricultural and rental markets say that restrictions on viewings due to lockdown led to a decrease in the volume of sales, as prospective sellers opted to defer their plans to sell.
According to the Society of Chartered Surveyors Ireland / Teagasc Agricultural Land Market Review and Outlook Report 2021 demand for rented ground also remains strong with rents this year expected to rise by 8% in Leinster, 5% in Munster and 6% in Connacht.
Nationally, the price for non-residential land ranged from an average of €5,900 per acre for poor quality land to €9,381 for good quality.
The survey of 156 auctioneers and valuers from all over the country was conducted in February 2021.
A new feature in this year’s annual survey, the 8th in the series, is that it now provides a county-by-county breakdown on prices of good land and poor-quality land.
The report finds that Leinster had the highest prices in 2020 because of the higher quality of land in the province and the high demand for it. For good land, less than 50 acres, average prices in the province ranged from a high of €13,600 in Kildare – the highest in the country - to €7,900 in Longford, while the prices for poor quality ranged from a high of €8,300 per acre in Kildare to €5,500, again in Longford.
In Munster, where dairy farmers are driving the market, prices ranged from an average of €11,900 per acre in Tipperary to €9,000 in Clare while prices for poor quality ranged from an average of €6,500 in Waterford to €4,700 in Clare.
In Connacht/Ulster prices for good land ranged from an average of €9,500 per acre in Donegal to €6,500 in Monaghan and for poor land from €5,750 in Monaghan to €3,250 in Leitrim, the lowest price in the country.
James Lee, Chair of the SCSI’s Rural Agency Group said that lockdowns due to Covid had led to a reduction in the volume of sales.
“The inability to view holdings or physical auctions led to a significant increase in the number of sellers postponing plans to sell land. In our survey, over a third of agents (35%) reported a decrease in the volume of land sold in 2020 compared with 19% in 2019. Virtual viewing options have been available to sellers, but clearly many have a preference for more traditional auction sales.”
“Agents in Leinster say younger farmers with a Green Certificate, which is a level 5 qualification are helping to drive the market. However, they caution that land price expectations from some vendors are simply unrealistic at this present time. In Munster dairy farmers are the most active buyers and renters of land as they continue to strive to increase their farm size to achieve economies of scale. In Connacht/Ulster average land quality is typically lower than other regions, tends to be available in smaller lots and is mainly for grass-based agriculture. While Covid has affected sales activity, it hasn’t affected output or prices and as a result farmer confidence about the future has been unaffected. has remained strong. The land market has shown strong resilience throughout the pandemic and agents believe prices will rise on average by 4% this year.”
“In the rental market, while Connacht/Ulster reported a decrease in prices last year – by 13% for grazing land – prices are expected to rebound by 6% this year, a little behind Leinster on 8% but ahead of Munster on 5%. The low level of supply is again an issue in the rental market, but its not Covid related. Here the issue is leases with twenty-four per-cent of agents reporting a decline in the volume of land leases in 2020 compared to just 8% in 2019 as more land is ‘locked up’ in long-term leases” Mr Cronin said.
Teagasc economist Dr Jason Loughrey said that while Covid may have impacted the volume of sales, it had little impact on agricultural commodity prices last year and this helped to support farm incomes and land values at a time of great uncertainty.
“The closure of hotels and restaurants and the contraction in the tourist business led to a sharp fall in sales of food and drink through these channels. However, this was largely offset by increased food and drink consumption within the home. Overall it is estimated that the average farm income in Ireland increased by 6% in 2020 and this year we forecast an increase of a further 3%.”
“Looking at the various farm sectors, last year was a good one for sheep farmers in particular, as they benefitted from higher prices as did pig producers. Dairy farm incomes were stable while incomes on cattle rearing farms increased. There was no change on other cattle farms. Tillage farmers did have a disappointing year due to adverse weather conditions which led to low yields and a drop in income.”
“While farmers benefitted from lower input costs last year, they are facing some cost pressures this year, with feed, fertiliser and fuel prices all on the increase. Lamb prices are expected to be significantly higher in 2021 relative to 2020 and farmers with a sheep enterprise will therefore benefit. A slight improvement in cattle farm income is expected with dairy incomes remaining stable. The outlook for tillage farm income this year is contingent on cereal yield developments. Normal weather through to the harvest period would see a significant improvement in tillage farm income in 2021” Dr. Loughrey concluded.
View the full report at https://www.teagasc.ie/publications/2021/annual-teagascscsi-agricultural-land-market-review-and-outlook-2021-.php
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For further information
SCSI: Contact Kieran Garry, 087/2368366 kieran@scsi.ie
Teagasc: Contact Eric Donald, 086/8381112 Eric.donald@teagasc.ie