Farmers have 'never been so rich in assets'
At the Farrelly & Mitchell investment meeting in Gorey last week, he said farmers should capitalise on land prices and their Single Farm Payment while they could.
"Land prices rose in value up until 1979 when they collapsed completely," he recalled. "It wasn't until 1997 that a farmer could get back the same price that he paid for the land in 1979.
"Farmers have never been so rich in terms of their assets, but if prices collapse it could take years for them to increase again. Just as farmers didn't have to do anything for land prices to increase, they won't be able to stop them if they drop," he said.
Mr Farrelly said decoupling will not be seen as a positive step for farmers and he believes that Franz Fischler will be seen as one of the biggest disasters in terms of leadership in Europe since Hilter, in what he would do to EU food-producing countries.
Due to increasing land values, pressure on prices and the impact of CAP, it made sense to spread investments across a range of classes, he said.
"Land value versus farm income - the returns from farming today bear no comparison to land prices," he said.
Farmers had every reason to be optimistic, he said. With the banks tripping over themselves at the moment to give money out, they would compete on interest rates, on when to pay it back, on how much they would give just to get farmers' business. Farmers should use this to their advantage and invest off-farm.
"The Single Farm Payment is an opportunity now for farmers to look at investments outside the farm instead of throwing the money into yet another slurry pit. Just ?5,000 of a Single Farm Payment will fund a ?100,000 interest-only loan for off-farm investment. It's only tradition that is holding farmers back from going down the off-farm investment route," he said.
Referring to farmers investing in the new US-based investment known as Green Oak Holdings, Mr Farrelly said he was bowled over by the potential in Florida.
"We are looking at what happened in Ireland over the past five years and asking: where else can this happen? Some place where interest rates are stable, economy growing, and population increasing.
"This particular part of Florida has all the right fundamentals and at this particular time has the potential to do what Ireland has done over the next 10 years," he said.
Mr Farrelly and his business partner, former IFA liquid milk executive secretary Malachy Mitchell, are now seeking up to 100 shareholders to invest in the Green Oak Holdings project.
- Maeve Dineen
