Will the current bidding wars for farmland alienate the dairy sector?

Margaret Donnelly

Dairy farmers in derogation are under increasing pressure to get more land or cut back on their cow numbers, with the latter being a move few want to make. Photo: Patrick Browne

March 14 2023 02:30 AM

The demand for farmland at the moment seems to know no bounds, with the prices being paid for leased land hitting record prices.

Unfortunately for farmers looking for land to buy or lease it remains in short supply and out of reach for many farmers, such is the demand from the dairy sector as they scramble to secure extra ground.

The profitability of dairying in recent years means the sector is in a position to pay top dollar for land that comes on the market and the recent surge in rental prices is being driven by dairy farmers not looking to expand, but to stand still.

Dairy farmers in derogation are under increasing pressure to get more land or cut back on their cow numbers, with the latter being a move few want to make.

Stocking rate

A reduction in the stocking rate that’s allowed on dairy farms means the sector has a simple problem: if they can’t carry the same amount of stock per unit area, either they reduce their stock or increase their area.

The IFA estimates that farmers not able to source additional land and forced to cull cows could face a cost of nearly €20,000.

While milk prices hit record levels last year, the money is in the bank for a lot of dairy farmers to justify the eye-watering prices being paid and while milk prices may be back already this year, it doesn’t seem to be enough to dampen the spirit of the sector.

Unfortunately, aside from the financial cost, it’s also making it near impossible for many tillage farmers to rent land this year.

The Tillage Incentive Scheme — which was introduced last year — aims to increase the amount of land in tillage and reduce the country’s reliance on imported feed. It had a positive impact on the amount of land going into tillage.

Collision course

However, changes to the nitrates rules and the hard facts of real-time economics have put dairy and tillage farmers on a collision course and at the moment there’s only one winner.

The long-term consequences of the latest battle over land could be more significant for the dairy sector.

There’s no doubt the scrutiny and pressure over dairy’s environmental credentials will only increase over the next few years.

Look to the Netherlands where forced farm closures are on the cards for around 3,000 farms in a bid to meet its greenhouse gas emission targets. Could that play out here too?

Protested

Dutch farmers have protested en masse over the past few weeks as the future of many livestock farmers come under threat.

Amid uncertainty around how our climate and water targets will be met, dairy farmers here could well need the support of other farmers to argue for their cause.

The question is will they turn out for any big protest or will the current bidding wars alienate the dairy sector from other farmers? Time will tell.