Low commodity prices for milk and grain as well as increasing uncertainty surrounding Brexit are just some of the factors that led to a subdued level of activity in the agricultural land market in 2016.
Land values in Munster were the worst hit, according to a new report on agricultural land prices by the Society of Chartered Surveyors Ireland (SCSI) and Teagasc. Selling prices for holdings with more than 100 acres with a residence fell by 20 per cent while those without a dwelling fell by 9 per cent. The declines were less significant for small holdings with up to 50 acres.
Conversely, the biggest increase was reported in Connacht and Ulster where land values increased across all land categories. Small holdings with a residence increased in value by 12 per cent compared to 2015 while the other land categories saw increases in the range of 1 and 5 per cent.
"The fall in land values in Munster may represent a reaction to the drop in profitability on dairy farms in 2016 following two particularly high dairy income years in 2014 and 2015," said Teagasc economist Jason Loughrey.
Modest increases
In Leinster prices for land with less than 50 acres showed the largest increase with average prices increasing by up to 6 per cent compared with 2015. In the medium and large holding categories, the increases were more modest coming in between 1 and 2 per cent.
On the regional variation Edward McAuley, SCSI regional manager, said: “Some surveyors attributed the price increases in Connacht/Ulster to the expansion of commercial forestry and believe this expansion is taking a substantial volume of some of the better agricultural land out of circulation.”
The report surveyed rural agency surveyors, 42 per cent of whom predict agricultural land values will remain unchanged in 2017. Their forecast appears consistent with the agricultural sector outlook in the report, which predicts a decline in beef and lamb prices this year, but an increase in milk and cereal prices.
The report showed that the performance of the land rental market was steadier than the land sales market in 2016. 51 per cent of chartered surveyors canvassed for the report predicted no change in prices.
According to Mr McAuley, smaller farms will be forced to consolidate into larger units due to ongoing economic pressures in the agricultural sector.
