Rented land hits €550/ac as experts warn of 'bubble'
Competition for land sees letting rates soar but Teagasc says prices are already too high
Concerns are being raised over the economic viability of rented land, with prices as high as €550/ac being paid for potato crops and €300/ac on grass for expanding dairy farms.
Auctioneers are reporting a distinct growth in the longer term leasing market with farmers willing to pay higher prices to secure five-year leases.
However, Teagasc advisor Ivan Whitten urged farmers to carefully weigh up the costs of land rental against increased volatility in world markets.
"Farmers - whether in milk, beef, dairy or tillage - are paying too high prices for land rental with the volatility there is in the commodities market," said Mr Whitten.
"The land rent that farmers need to be paying going forward needs to be paid on the productive capability of the field and their actual growing costs or production costs."
The expansion in the dairy industry post quota, along with more farmers competing for land for the young farmers scheme and the tax incentives for longer leases are just some of the factors behind the demand.
"Farmers are out competing against each other and driving up the price of land," said Mr Whitten.
He urged those entering into five-year or longer leases to ensure they have review clauses built in.