The cost of agricultural land in Ireland is forecast to rise by a further 8 per cent this year on the back of constrained supply and higher demand from the dairy sector due to new environmental regulations, according to a new report by State farming agency Teagasc and the Society of Chartered Surveyors Ireland (SCSI). Rental prices are expected to increase at an even higher rate of 14 per cent.
“Changes to the European nitrates directive, particularly measures aimed at protecting water quality, will have an impact on land prices, especially rental prices,” Peter Murtagh, chair of the SCSI’s rural agency committee, said.
“In order to maintain current levels of milk production – and to comply with the directive – many dairy farms will need to either increase their land area or reduce milk production. We’d expect the impact on sales and rental prices will be more acute in regions where dairy is the dominant farm enterprise and where stocking rates are higher.”
Since the lifting of EU quotas in 2015, milk output has effectively doubled to 10 billion litres while the State’s dairy herd has increased by a third to 1.6 million animals. At the same time, the Environmental Protection Agency has highlighted a major decline in water quality.
According to SCSI and Teagasc’s latest Agricultural Land Market Review and Outlook report, average non-residential farmland prices in 2022 ranged from €5,564 per acre for poor quality land, up 5 per cent on the previous year, to €11,172 per acre for good quality land, up 2 per cent year on year.
The report noted that the share of agricultural land, which transacts for sale annually was just 0.5 per cent “and this is one of the main reasons for the strong agricultural land letting market which exists here”.
It found that the most expensive land in the State last year was in Kildare with good quality land across different plot sizes fetching an average of €15,056 per acre. The land with the lowest value was poor quality land in Mayo where the average price was €2,866 per acre.
The report noted that the average price of good quality land on holdings of less than 50 acres in Kildare was €15,333 per acre, followed by Meath on €15,200 and Waterford on €15,000. Tipperary on €14,938, Wexford on €14,857 and Carlow and Cork on €14,250 round off the top six places.
“Interestingly Waterford recorded the single highest price per acre in one plot size, with good quality land on plots between 50 to 100 acres going for €17,400 per acre,” it said.
On the outlook for the farming sector here, the report said Russia’s invasion of Ukraine is continuing to have a major impact on agricultural markets, at both international and domestic levels.
“As in many other countries the invasion resulted in higher energy and fertiliser prices for farmers here in Ireland, and these have remained at elevated levels despite some modest declines in recent months,” Teagasc economist Jason Loughrey said.
“The increased cost of many key inputs was a major concern throughout 2022, but these were counterbalanced by record milk prices and by significantly higher grain and meat prices,” he said.
