The latest survey on farm land sales suggests a growing confidence in agriculture. The Irish Farmer's Journal annual land price report shows that more land was offered for sale last year than in any year since the report started eight years ago. More than 86,000 acres were offered for sale in 2014, a 15.4 per cent increase on the previous year. The average price also increased by 5.2 per cent during the year to reach € 9,890 per acre.
The upcoming abolition of milk quotas on March 31st is a key factor in this growing confidence. Cow numbers are expected to increase by at least 300,000 in the coming years which means a lot more grass will be needed. Many dairy farmers planning expansion are already struggling to manage their herds on the land they have. They are looking at leases and partnership arrangements but if good land comes up for sale locally, they will not ignore it.
The survey also suggests the property speculator is back. The average price of land in Co Dublin jumped by almost 50 per cent to € 23,496 per acre last year. Not surprisingly, Dublin had the highest average price in the State, but the highest percentage price increase was seen in neighbouring Wicklow, where prices rose by 56.3 per cent.
The report editor Lorcan Allen says some huge prices were paid for agricultural land on the outskirts of towns and villages that may have future development potential. He highlights one tillage farm in Dublin that was valued by an auctioneer at €20,000 per acre but ended up selling for almost €50,000 per acre.
“Even if the investor has no intention of developing the land themselves, they may view the investment as a safe haven to park money, especially when the property is located so close to an urban centre,” he says.
At the other end of the scale, Co Leitrim had the lowest average price at €4,047 per acre, followed by Sligo at €4,985 and Mayo at €5,715 per acre.
Mr Allen also notes that UK buyers were active in the market last year, particularly in the last few months of the year. The euro had fallen to a six-year low against sterling at that time, making Irish property a very attractive prospect for UK buyers.
2014 was a tough year for many Irish farmers with the well-documented price woes of beef farmers and a downturn in grain prices but this still didn’t dampen the average price. And 2015 is looking like another busy year for land sales.
The opening of the US and Chinese market to Irish beef and the ramping up of activity in the dairy sector suggests that this confidence will continue, unless the weather intervenes.
A particularly bad Spring and summer, a fodder crisis, and volatile milk prices could dent that confidence quicker than the rise and fall of an auctioneer’s gavel.