Donegal has the most expensive farmland in Connacht-Ulster, according to the Society of Chartered Surveyors Ireland (SCSI)/Teagasc Agricultural Land Market Review and Outlook Report 2022 which has just been published today.
Last year prices in the region ranged from €13,375 per acre for good land in Donegal to €2,760 for poor quality in Leitrim
SCSI auctioneers and valuers say that following strong price growth in 2021, particularly for good land, the price of agricultural land in general looks set to increase by 6% on average this year.
In a major new survey, chartered surveyors, auctioneers, and valuers, operating in the agricultural and rental markets say sales activity was boosted by the exit from Covid restrictions and they predict prices will continue to rise, underpinned by strong demand and a continuing low supply of land for sale.
The price of good land showed the biggest increase in 2021 - up by an average of 17% nationally from €9,381 to €10,962 per acre.
The price of all non-residential land, on holdings of less than 50 acres also showed significant increases. In Munster prices were up 14%, in Leinster they rose by 12% while the increase in Connacht/Ulster was 5%.
According to the report 2022 average prices in Connacht-Ulster ranged from €13,375 per acre in Donegal for an acre of good, non-residential land under 50 acres – the highest in the region and up significantly on €9,500 in 2020 – to €5,025, in Leitrim.
The price for poor quality, non-residential land under 50 acres in the region ranged from an average of €5,250 per acre in Cavan and Monaghan - to €2,760, again in Leitrim. The average price of an acre of poor-quality land on a smallholding in Donegal was €3,625, down from €4,250 in 2020.
While the average price of poor-quality land may be up on smaller holdings across the three regions, nationally, the average price for poor-quality land dropped from €5,900 in 2020 to €5,308 last year, a fall of 10%. This decline can be attributed to price developments for larger parcels of poor land in Munster and in some parts of Connacht/Ulster.
The report found the demand for rented ground remains strong with rents this year expected to rise by 10% nationally. Looking at the provincial picture agents expect rents to rise by 9% in Connacht/Ulster and Munster and 12% in Leinster. The survey of 95 auctioneers and valuers from all over the country was conducted in February and March 2022.
Auctioneer and SCSI member Cormac Meehan said the lifting of Covid restrictions boosted sales activity and market confidence.
“In our survey, 53% of SCSI agents reported an increase in the volume of land sold when compared to the previous year while 24% reported that the volume of land sold remained the same.
"In addition, two-thirds of valuers reported an increase in the percentage of valuation requests for the transfer of land. This is up from 43% in 2020. These are positive trends and show confidence in the market from sellers and buyers
“As market demands strengthen one trend which SCSI members are reporting is greater interest in dwellings on smaller holdings. One of the consequences of Covid is that more and more people are now working from home and in many cases seeking a better work life balance outside of large urban centres.
"It’s worth noting that typically residential farms of less than 50 acres are around 20% more expensive than non-residential farms of similar size”
“While we saw significant price changes in different counties and for various land types last year the overall market sentiment going forward remains positive.
"Agents anticipate an average increase in land values of 6% this year. This forecast is primarily based on the supply-demand imbalance where an insufficient level of land is available for sale. This is particularly true with regard to dairy farmers who are looking to increase the size of their holdings.”
“It’s a similar situation with regard to land rental prices, with the forecast increase for this year reflecting the tightening supply of rental land, particularly as land parcels continue to be tied up in longer-term leases.”
Teagasc economist Dr Jason Loughrey said that inflationary price pressures which were identified in last year’s report have sharpened in the intervening time. These pressures have accelerated due to the war in Ukraine and are likely to have a significant impact on farm incomes this year.
“2022 is likely to be remembered for significant increases in commodity prices and general inflation. The cost of the 3Fs, fuel, fertiliser and feed began to rise last year and now following the invasion of Ukraine, the rate of these cost increases has escalated dramatically with production costs in 2022 set to be much higher.”
“While the news on the costs side is quite negative, from the perspective of farmers there are positive developments on the output side, with significantly higher grain, dairy and meat prices now likely in 2022 than would have been forecast even two months ago.”
He added the key and worrying question for farmers is, will higher farm output prices cover their higher input costs this year?
"In any case, crop and dry stock farmers are facing short term cash flow issues due to having higher costs outlays than normal in the early part of the season. But right now, it is too early to say with confidence quite how the current turmoil in commodity markets will affect Irish farmers’ incomes for 2022.”
He also posed the question would the current situation in Ukraine have an impact on land prices?
"It will come down to the duration and overall economic impact as well as the specific impact on input costs and the profitability of the farming sector in Ireland. But if viability and cashflow issues are exacerbated throughout the remainder of 2022 and beyond, it could impact on the prices paid for agricultural land,” said Dr Loughrey.
Prices elsewhere around the country
This year’s annual survey, the 9th in the series, provides a county-by-county breakdown on the prices of good and poor-quality land.
The tables show that in 2021 Kildare retained its position as having the most expensive land in the country at €15,350 per acre of good land on holdings less than 50 acres. This is up from €13,600 in 2020, an increase of 13%.
While Leinster counties made up the first eight places on last year’s most expensive list, Cork has shot up into second place on €15,070 on this year’ list with Louth next on €14,500, Meath on €14,230 and Tipperary on €14,000 making up the Top 5.
In Leinster average prices for good land on less than 50 acres ranged from Kildare’s high of €15,350 to €11,600 in Offaly, while the prices for poor quality ranged from a high of €9,125 in Louth to €4,967 in Longford.
In Munster, the price differential between good quality and poor-quality land increased most notably. Dairy farmers are continuing to drive the market here with prices for good land in 2021 on holdings under 50 acres ranging from €15,070 in Cork to €9,800 in Clare. Prices for poor quality ranged from an average of €7,700 in Cork to €3,500 in Clare.
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