When will bullfighting in the farmland end?

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We’ve all heard the oft-quoted phrase, “Buy land, you won’t grow it anymore.” After reading Jim O’Brien’s semi-annual report on the agricultural land market, that phrase seems more true than ever.

The market seems to be red hot right now as dairy farmers and non-farmers alike are driving prices to new highs, particularly in the east of the country.

But where will it end, or will farmland prices keep climbing higher and higher? The country’s auctioneers are optimistic and see no signs of a price drop anytime soon – €15,000/ac is the new €10,000/ac it seems!

And there are a number of trends that certainly support this view. First, as we reported on the front page of Independent Farmingare new nitrate regulations forcing many dairy farmers to reconsider their business and wondering if they have enough land to cover their cow numbers?

Farming organizations say many will find they are not, and as one farm adviser told me this week, “The last thing dairy farmers are going to do is reduce the number of cows”.

This has and will continue to see strong demand for land in dairy areas. Regular readers of our real estate section will have seen the term “local merchant” more often of late.

Land has always been viewed as a good long-term investment by this cohort, and attractive tax breaks for long-term leases and inheritance are no doubt on the minds of these buyers.

In the coming decade, environmental buyers could add another dimension to the property market, particularly in peripheral areas. The UK is already witnessing large multinationals buying land to offset emissions, while here Coillte has pledged to increase forest tenure by 100,000 hectares.

The “agricultural value” of land may not be the sole determinant of its value. To counterbalance these upward trends, there are those who believe Irish farmer demographics will bring more land to market over the next 10 years.

But in the first half of this year very little land was sold for less than €10,000/ac. At this price point, any large farm is completely unaffordable for non-dairy farmers unless other off-farm income can be used to supplement what can be made on the farm.

The question arises: are such prices economically justifiable in the long run and will fewer and fewer real farmers be able to assert themselves in this market over the years?

https://www.independent.ie/business/farming/comment/when-will-farmlands-bull-run-come-to-an-end-41898063.html When will bullfighting in the farmland end?

Fry Electronics Team

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