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Tuesday 25 September 2018

Hungry for land - Land letting prices hit over €300/ac but auctioneers warn this is unsustainable

Expanding cow numbers and the nitrates directive have seen dairy farmers push land letting prices to over €300/ac
Expanding cow numbers and the nitrates directive have seen dairy farmers push land letting prices to over €300/ac

Jim O’Brien

Land letting is gone 'stone mad' according to Blarney auctioneer Dan Fleming. His experience is mirrored around the country. Dairy farmers are swallowing up all available letting land and paying up to €350/ac for stubble ground that needs reseeding.

The hunger for ground is being driven not only by increased cow numbers but by the need for extra land to stay within a range of regulatory requirements.

"This is a perfect storm for landowners," Mr Fleming said. "The dairy farmer is cash rich and thriving but he needs land for extra stock and he needs it for slurry in order to stay within his nitrates requirements and for maps.

"Meanwhile," he continues, "the tillage man isn't making a bob. Straw is more valuable than grain - something that was never heard of."

However, he says the tillage farmer's cloud has a silver lining in that "the dairy man is willing to take the tillage ground, reseed it and pay over €300/ac for it on a seven year lease."

While the dairy farmers are satisfying their need for land to absorb their slurry, this in turn is causing a problem for pig and poultry farmers who need tillage ground on which to spread the effluent from their operations.

"This is a real problem," says Mr Fleming. "In fact the smaller dairy farmer also has the same problem. I am concerned about it, the whole thing is imbalanced at the moment and causing a lot of problems. It is not a realistic market," he said.

Like Fleming, Nenagh auctioneer Eoin Dillon operates in a mixed tillage and dairy area where the milkman has the upper hand at the moment.

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"I saw €265/ac paid for tillage land by a neighbouring dairy farmer on a seven year lease but he has to reseed it," he said. "The farm may have made more on the open market but the farmers are long-time friends."

He is also aware of a letting arrangement where a tillage farmer has let 80ac in two lots of 40ac to two dairy farmers for €300/ac.

The landowner will do the machinery work while the dairy farmers will supply the seed and the fertilisers.

"I have a huge list of enquiries for letting land," he said, "and 100pc is coming from dairy farmers".

In Meath it is much the same story where the neighbouring dairy farmers are paying €350/ac for ground that has to be reseeded.

But Stephen Barry of Raymond Potterton auctioneers says cowmen have competition as potato ground is making €600/ac for lay ground and between €400 to €450/ac for second rotation on a five year lease.

Mr Barry agrees that problems with slurry nitrates and maps are strongly influencing the market and the demand for land. "If I had 1,000ac this minute I'd have tenants for it," he said.

In the south-east Matthew Conry of REA Dawson, Tullow says the season is just opening with a lot of enquiries but a tight supply of land.

"With conacre agreements dwindling and the longer leases taking hold the supply of land is getting scarce," he said. He expects prices to hold to last year's levels making between €250 to €300/ac for grass or tillage. Kilkenny auctioneer Joe Coogan says there is a huge hunger for land out there.

"Farms of any size that are well fenced with cattle handling facilities will make between €250 and €300/ac. I also have a list of enquiries from tillage farmers," he said

However, in the midlands and the west the recent long spells of wet weather are taking their toll on the land market.

Gordon Cobbe of GVM Tullamore said the letting season and the selling seasons will be quite late. "People are not minded to put wet land on the market," he said.

However, he believes there is a great shortage of land and thinks prices will be as strong as last year.

"While dairy farmers have been very active, young farmers or new entrants really drove prices in the letting market last year.

Once the young farmers became involved, prices went up by 10pc," he said. "Fresh, naked land (without entitlements) was making €200 to €230/ac," he said.

John Earley in Roscommon agrees that the season is going to be much later this year due to the rain. "I have never seen land in such condition and so much water around," he said. In the west he expects fresh land to be making in the region of €150 to €200/ac.

Carnew and Gorey auctioneer David Quinn expects the trend to be stronger than last year. "I recently let a large tillage farm in North Wexford for €275/ac, while a conacre auction of 24ac of tillage land last week netted €287.5/ac," he said.

In general Mr Quinn sees naked land for tillage making between €200 to €250/ac rising to €300/ac for neighbouring dairy land. Land with entitlements will make around €170 to €220/ac where the entitlements remain with the landowner.

"However, it is hard to make an accurate prediction as the amount of land available for renting is scarce," he said.

Land letting prices hit over €300/ac but auctioneers warn this is unsustainable, reports Jim O'Brien


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