I wish I could start this blog differently. Something along the lines that Kilcormac/Killoughey have won another Senior Leinster Club Hurling Title and we have increased the size of our milking platform. However, as is often the case, things don’t go according to plan.

Last Friday, a 13.5 acre field within cow walking distance of our farmyard was up for auction. It was the final lot of six offered for sale, formerly owned by a deceased neighbour. This was our first time to participate in a public auction of land, so to say I was nervous is an understatement.

Auction

There were quite a number of people in attendance, but to be honest we were not expecting many to go for this parcel. The undulating triangular field has a heavy soil with rock outcrops, making it unsuitable for tillage in its present state.

No one to our knowledge was interested in the field. Therefore I was somewhat surprised by the opening bid of €90,000. The unknown bidder was a well dressed gentleman, standing at the back of the room. We found out afterwards that he was a solicitor acting on behalf of a client. The auctioneer, Peter Scully of GVM, sought other offers and we duly obliged.

Bidding

The bids came thick and fast in €5,000 increments. I could feel my heart pounding against my chest. There were many thoughts running through my head. One that kept popping up was the fact that we will be calving 70 cows next year on 70 acres.

That’s a good few cows and I don’t want to get ahead of myself, but will I be able to make a living from this in years to come? It’s more than adequate now when I’m single, living at home. However, realistically I will need to expand further in the future. An additional 13.5 acres could possible allow us to reach 100 cows someday.

Prior to the auction, when my heart rate was a little lower and my head a good bit clearer, I got advice from an experienced friend. It was to determine the maximum amount that I was willing to pay for this ground. To put things in perspective, the average price paid for land in Offaly last year was €7,677/acre, according to the Irish Farmers Journal Land Price Report for 2013. That is almost 20% lower than the national average, which stands at €9,400/acre.

Value

For the type of farming system we are trying to implement, this particular piece of land would require a lot of investment. Top of the list would be drainage and reseeding, as well as the installation of water troughs and fencing. All of this has to be taken into consideration when making an investment appraisal.

Perhaps a more important question worth asking is the level of debt we might be capable of servicing. Our existing farmyard facilities are already at capacity. As a result, new cubicles and a parlour will need to be built next year. We will be seeking €100,000 for 10 years at 5% interest rate, resulting in an annual repayment of €13,000.

If the land went to say €10,000/acre, it would cost €135,000 in total. If we put this over 20 years, at the same interest rate, it would add another €10,530 to our annual repayments. I do believe that if we ran the farm efficiently we could sustain this level of debt, even in a poor milk price year. However, anything above this threshold would erode our take home margin. This brings me back to the question of what is the maximum we should pay for this piece of ground?

Heartbreak

Bid by bid, we were getting closer and closer to this predetermined sum. Finally there was silence. Mr Scully asked if there was any further advance on our bid of €140,000. Silence still. As with all public auctions, he consulted with the selling party.

In the meantime, we could see the under bidder making a phone call. The auctioneer returned and confirmed it was on the market. At this point, if no one else placed a higher bid, we had secured the land. However it wasn’t to be. The solicitor raised his hand for the final time. The hammer fell and the 13.5 acres sold for €142,000 (€10,519/acre).

To be honest, it was very difficult to stop bidding. However we could not justify paying anymore. All that we can do, is wish the new landowner the best of luck.

Although it might not seem this way now, maybe it was for the best. Maybe this land came to soon?

K/K players and supporters regret last Sunday’s result. In the past, I would worry that I might have labelled this auction ‘a lost opportunity’. However, our experiences teach us to accept outcomes, because if you dwell too much on past losses you might miss out on present potential. Best of luck to the K/K Minor hurling team in the county final this weekend.