Irish dairy farmers could see their profit margins shrink by more than 50 per cent this year due to a fall in global milk prices and the input cost shock derived from the US-Israeli war with Iran and its impact on oil prices, a new report has warned.
On Tuesday, the Society of Chartered Surveyors (SCSI) and State agency Teagasc said they are forecasting that Irish agricultural land sale and rental prices will increase by a modest 4 per cent this year, compared with 7 per cent in 2025.
In their annual review of the agricultural land market, the organisations said a confluence of factors – including rising costs across the supply chain and reduced output – will weigh on agricultural land values in 2026.
Irish dairy farmers, a “key driver” of land sales and leasing activity, could see their net margins per hectare of land squeezed by “in excess of 50 per cent” compared with last year, according to the report, “as a result of lower milk prices and higher input costs”.
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“Generally unfavourable” weather conditions in the east of the country in early 2026 will likely contribute to an increase in concentrate cattle feed, adding to dairy farm costs, the report’s authors said.
“However, the main source of increased expenditure is likely to be higher fertiliser and fuel prices,” they said.
Meanwhile, tillage farmers are also anticipated to earn “significantly lower market-based net margins per hectare”, SCSI and Teagasc said, also due to rising input prices and “uncertain weather” conditions, and largely static global grain prices.
Overall, higher energy prices will affect all parts of Irish agricultural production and the economy at large.
“The impact on agriculture will be particularly acute given the large share of the costs of production on Irish farms that are directly or indirectly tied to energy and fertiliser prices,” the two bodies said.
While demand for Irish agricultural land has remained “strong” in recent years, “heightened risk perceptions”, particularly within the dairy sector, may make farmers more cautious about expanding production, according to the report.
Against this backdrop, the price of agricultural land and rental values are expected to increase by 4 per cent on average this year.
Jason Loughrey, an economist at Teagasc, said cattle enterprises recorded an “exceptional performance” in 2025, supported by rising cattle prices, while higher milk prices in the early part of the year helped improve dairy farm profitability.
However, the outlook for 2026 is “significantly more challenging”, he said.
“While the outcome and duration of the war remain uncertain, it is likely that elevated fertiliser and energy prices will persist through 2026 and into 2027,” he said. “These developments also highlight the extent to which Irish agriculture remains exposed to global supply chains and external economic shocks.”
Frank Harrington, chair of SCSI’s rural agency, said low levels of supply are underpinning strong land prices in the Republic.
However, farmers are expected to adopt a more “cautious approach” to land purchases in 2026, due to heightened uncertainty.
