IPAV, the Institute of Professional Auctioneers and Valuers, is a representative professional body for qualified, licensed auctioneers, valuers and estate agents throughout Ireland. It currently has 1,100 members, a large portion of whom deal with agricultural land.

“From what I see from our members, the whole agricultural market has levelled off, and levelled off quite quickly,” says IPAV’s CEO Pat Davitt.

“A lot of people thought we were going to keep rising – and I know we are all talking of this magic figure of €10,000/acre where we would like to see land prices go – but I think this year has surprised a lot of people.

“The different uncertainties that have been on the market over the past few years, now we are coming to pay the price. Over the past year, the prices of crops, dairy and pigs have all been bad.”

Even as prices begin to lift in the various sectors, he says: “Brexit has come to add insult to injury.”

All of these ingredients have come together to cause a lack of confidence in the land market, according to Pat.

This trend is going to continue “for the remainder of 2017 and as long as Brexit is there”.

The future of CAP is also having an effect, with uncertainty surrounding how much the UK will contribute over the coming years, with a cut of €3bn to the EU CAP budget a concerning possibility.

“I think that as long as that discussion is out there and that uncertainty is out there, uncertainty in the land prices will continue,” Pat explains.

Steady market

While uncertainty and volatility are the two buzzwords surrounding every aspect of Irish agriculture at present, the land market remains steady, with the average price of land hovering between €8,700/acre and €9,500/acre since 2013.

“A stable market is good for auctioneers,” insists Pat. “It means sellers are more realistic, as it has been for the past four or five years.

“If the prices are steady and rising slowly, it is great – but if it is steady and falling, then it’s more difficult. If it is falling, people who want to buy won’t want to buy today, but tomorrow, next week, or next year, as they believe prices will fall. If you are buying, the price is never too low – and if you are selling, the price is never too high.

“The fancy prices, as we would call them in the auctioneering land, that day is gone. There are still farmers buying land who are hobby farmers, but an awful lot of the clients who are buying land now are [intensive] farmers, which is great.”

Young farmers

Pat has seen the recent change of mentality among young farmers who are trying to get into the land market. They are keen to expand, but only if it makes financial sense.

“Young farmers are a lot more clued in to the business sense of farming and making a profit at the end of the day. Farmers down through the years mightn’t have had a clue about the accounts, and when a piece of land came up beside them, they just wanted it.”

A recent trend towards long-term leasing has also been noted by Pat: “A lot of young farmers are looking at leasing and longer-term leasing as a cheap way of getting into farming.”

When asked if long-term leasing is a more viable alternative to buying a big block of land to begin a dairy operation, for example, Pat saw the merits of both options: “I suppose it’s an alternative, and it’s an alternative that wasn’t really there until the Government extended this scheme and gave tax allowances to older farmers so that they could get a certain amount of tax-free income from leasing.”

However, Pat was quick to point out the benefits of the conacre system too: “A of older farmers don’t want to rent their land. They just don’t want to let anybody else on their land. So if you can go and talk to them as an auctioneer and explain that it’s only for 11 months, and if they don’t like it they can go back to where they were – and if they do like it can be done again – the possibility opens up to look at longer-term leases.

“It is a great way of getting farmers involved – getting them into the letting process and into longer-term leases. It’s a great stepping stone and it shouldn’t be done away with,” he believes. From the young farmer’s point of view, there are a lot of flaws with the conacre system.

“You have younger farmers looking at the farming point of view and one year isn’t good enough because they’re not going to spend money on the land. They want the longer-term security.”

Pat has seen a big shift away from the five-year lease and towards the 10-, 12- or 15-year lease in the last few years, as farmers aim to develop a profitable business.

A good investment?

For a farmer of any age looking to purchase land, the question that they must ask themselves is whether or not it is a good investment.

“I suppose the only thing with land is that it is scarce enough. At the same time, for young farmers to be investing in it – and investing in it from an occupational point of view and from a futuristic point of view – it has to be an option.

“For [most] people buying land at €7,000 to €8,000/acre, the one thing I would say is that the money is always there in the land. However, with that said, to be buying land as opposed to a commercial building, I would say that the commercial building is probably a better investment,” said Pat.

“Having said that, if people are into the land and want to farm or if young farmers want to expand their farm to a bigger level, then I think it has to be a good investment.”

Northern buyers

“Buyers coming down from the North have definitely slowed down,” according to Pat, when discussing the effects that Brexit has had on the land market.

“A lot of them are undecided as to what’s going on. I think there is still a certain amount of interest coming from England but I wouldn’t say there is as much as there was before the Brexit vote. It has been a bit different for the past year and a half, even coming up to the vote things had changed.”

However, it is not all doom and gloom for the market, Pat insists: “There have been other people there to pick up the slack. Land is still a good trade and has been going quite well. Land is selling, which is good.

“Auctioneers have had a good few months – although there was little enough land on the market for the first few months of the year – in the last three of four months, which would be the typical selling period anyway, a good bit of land has come on the market.”

Future

The future of the land market is anyone’s guess but, with an aging population in farming, Pat believes that over the next 10 years there will be more farms coming to the market, as farmers have no one to take over the land.

“More land is going to come on the market [in the future], and there are probably going to be [fewer] farmers, there is no doubt about that. There are going to bigger farms, which may be a plus and may not be a plus. For rural Ireland, I don’t think it is going to be a plus.” CL