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.
That’s according to the Society of Chartered Surveyors Ireland/Teagasc Agricultural Land Market Review and Outlook Report.
The report revealed that the price in Munster for an acre of non-residential land under 50 acres last year ranged from an average of €5,800 for poor land to €10,500 for good quality.
It found that dairy farmers are driving the Munster market and that prices ranged from an average of €11,900 per acre in Tipperary for good land less than 50 acres – the highest in the province – to €9,000 in Clare.
The price for poor quality land ranged from an average of €6,500 per acre in Waterford to €4,700 in Clare.
In Cork the average price of an acre of good land under 50 acres was €11,100 – the second highest in Munster - while for poor quality it was €5,900.
The survey of 156 auctioneers and valuers from all over the country – which was conducted in February 2021 – found that demand for rented ground also remains strong with rents this year expected to rise by 5% in Munster, 6% in Connacht and 8% in Leinster.
Miah McGrath of McCarthy and McGrath, who is a member of the SCSI’s Rural Agency Group, said: ‘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. 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. The land market has shown strong resilience throughout the pandemic and agents believe prices will rise on average by 4% this year.
‘The low level of supply is again an issue in the rental market, but it’s not Covid related. Here the issue is leases with 24%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 Lee said.
The report found 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.
Teagasc economist Dr. Jason Loughrey said: ‘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%.
‘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.’