Land rental prices are approaching nearly €600/ac in some parts of the country as farmers in intensive areas scramble for land, while many west of the Shannon plan to destock and retire.
In Munster and Leinster the rental market appears to be becoming a perfect storm for landlords and a nightmare for renters due to a shortage of land and huge demand due to the need to comply with the Nitrates Directive.
However, agricultural adviser Martin O’Sullivan warns that leasing land at current prices in the region of 500 euros/ac makes little financial sense – especially when the price of milk falls.
“I have no problem with farmers leasing land to expand their business if the existing business is run efficiently, but you cannot recommend expansion as an antidote to inefficiency,” he said.
“So if leasing land should be justified, the amount a farmer should pay will be determined by the impact that the additional land will have on his profitability or the medium-term sustainability of his farm.”
Blarney-based Dan Fleming, one of Munster’s leading letting agents, said he didn’t have “half enough” land to meet demand.
“Actually, it’s quite simple – the dairy farmer needs more land, otherwise he has to sell cows,” said Mr. Fleming. “Many of them have taken out loans based on cow counts, so they can’t afford to drop any. Also, a good dairy farmer will do anything but sell his good cows and downsize the herd that has built up over the years.”
West of the Shannon, however, the story is very different. Roscommon auctioneer Ivan Connaughton says many older farmers have chosen not to join ACRES and are not interested in the new CAP.
“They are with GLAS until the end of 2022 and will sell the stock and lease the land in January. Some will sell the land,” he said. “I expect there will be a lot of rental space in the new year and we will see significant land sales in this region in 2023.”
Gort auctioneer Colm Farrell said. “The environmental priorities in the new CAP are having an impact as dam numbers are already being reduced, and there are signs programs like Hen Harriers will no longer offer the rewards they once had.
“There is no incentive for young farmers to lease farms. Here in the west there will not be the same reputation on land as in the dairy lands.”
According to GVM Limerick’s Tom Crosse, there is a distinct shortage of new property entering the rental market.
“We have about half a dozen new properties available, but we have about 100 places that are being turned over,” he said. “There is phenomenal demand for land and there is very large inventory. My phone never stops ringing,” he said. He expects prices “north of €250/ac”.
Kilkenny auctioneer Joe Coogan saw a 50ac unclaimed farm in Abbeyleix, Co Laois fetch €570/ac in a 90 second auction last week. The new tenant is a farmer.
In Cork, Dan Fleming recently had a 21 Ac package of grain milled in East Cork, fetching €450/Ac. He has a 60ac interest in his books near Cork, currently raking in €375/ac.
“Farmers are now trying to pay the land monthly by standing order — people seem to like it,” he said.
Tullow’s John Dawson says the new rental season will have many variables, with different prices being paid for claimant and claimless land.
“It depends on who wants what, but I reckon arable land will average between €280 and €350, with grass between €340 and €400 in some cases,” he said. Mr Dawson added that there is a real shortage of land for rent in the strong farmland that makes up its catchment area.
Michael Barry of Callan in Kilkenny and Rathdowney in Laois believes prices will remain high.
He reports a price of €310/ac paid for a 15 year lease on a 168 ac farm on the Tipperary/Kilkenny border. In Knocktopher, an 86ac farm with no claims made €350/ac.
“There’s a lot of private dealings between neighbors who bring in the auctioneer to do the paperwork once they agree on the terms,” he said.
https://www.independent.ie/business/farming/farm-property/scramble-for-land-as-letting-prices-reach-570-per-acre-42214601.html Fight for land as rental prices reach €570 per acre