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Farmers warned to be wary of land price bubble

FARMERS have been warned not to get sucked into a land-rent bubble in advance of new EU rules on payments.

The warning came as landowners were told they would have to prove that they have been farming their land in order to qualify for payments.

EU Agriculture Commissioner Dacian Ciolos told farmers that he was seeking to prevent a land-rental price bubble in Ireland, which could follow because of changes to how farm payments are made.

He was trying to quash fears that Irish farm rents will soar in advance of proposed reforms of the Common Agricultural Policy (CAP).

In Dublin yesterday to take the views of Irish farmers on his reforms, Mr Ciolos said that only active farmers -- rather than people who simply own a lot of land -- will be eligible for the payments, which are currently worth €1.3bn a year to farmers.

From 2014, payments will be based on the size of the farm and payments will be restricted only to those who were active farmers receiving a single farm payment during 2011. Payments are based on levels of food production in the past.

This requirement was being introduced to address Irish concerns that landlords could demand excessive rental prices from farmer tenants or even take back the land in the hope of securing CAP payments themselves. However, the bigger risk is price inflation.

Mr Ciolos told the Irish Farmers Association's (IFA) AGM that he would look in the next few weeks to see if further measures could be taken to address concerns about soaring rental prices.

Ireland has a uniquely high level of short-term farm letting, with two million acres or 20pc of farmland rented, increasing the risk of price hikes when leases are renewed. Some farmers have predicted that prices could as much as double.

IFA president John Bryan said the measures did not go far enough to prevent the risk of landowner speculation. He warned members not to gamble on the reforms by paying inflated rental prices.

"Speculation on the reference year and on the outcome of the CAP negotiations is a high-risk game. The best advice for farmers and landowners is to continue their normal business practices," he said.

Mr Ciolos said it was essential that CAP payments from 2014 be based on current levels of farming, rather than on what someone's father used to produce 13 years ago when old payment levels were set.

Agriculture Minister Simon Coveney strongly criticised the move to a flat-rate payment per hectare and warned that these could transfer funding from the most productive Irish farms to larger less productive ones.

However, he welcomed the fact that the final shape of CAP reform will be decided during Ireland's EU presidency in 2013 and said agriculture was one of the good news stories of the Irish economy.

Taoiseach Enda Kenny spoke at the IFA's AGM dinner in Ballsbridge, Dublin, last night. He said the CAP reform package launched last October was crucial for the future development of Irish agriculture. He also praised the overall contribution of the Irish agrifood sector, which showed exceptionally strong growth last year.


Irish Independent