The land rental market is on fire, with the cost of grazing ground hardening by as much as €100/ac in the south and east on the back of unprecedented demand from dairy farmers.

Base prices for good-quality grassland generally range from €350/ac to €450/ac in Munster and Leinster, but costs have topped €500/ac.

Good-quality land is generally making €250-300/ac in the west, with young farmers and milk suppliers being the most active players. Large dairy farmers are the primary drivers of the rental market in the south and east.

IFA director of policy Tadhg Buckley predicted intensive dairy farmers will need to rent or buy an additional 68,000ac or cull cows due to changes in the organic nitrogen limits under the Nitrates Directive.

Efforts to avoid cutting cow numbers have resulted in dairy farmers competing strongly for any available land and paying premium prices in rental deals.

“It’s all about nitrates and stocking levels,” said Tom Crosse of GVM Auctioneers.

“Anything new is making a bundle. You could be talking of €300/ac, €400/ac or €450/ac. There has been a 20% lift in prices,” he maintained.

Mitchelstown auctioneer Eamonn O’Brien said five-year leases that are up for renewal are generally moving up from €250/ac to €350/ac in Co Cork.

Meanwhile, good blocks of ground that are new to the market are making between €350/ac and €450/ac, according to Pat O’Shea of Fermoy auctioneers Dick Barry and Sons.

Competition from the dairy sector has also pushed up the cost of rented land for tillage farmers. A price of €570/ac was given recently for a five-year lease of 50ac near Abbeyleix.

Kilkenny-based auctioneer Joe Coogan, who conducted the letting by public auction, said the lands were not taken for potatoes.

Coogan also let two blocks of ground near Ballyfoyle, Co Kilkenny, recently. A 19.5ac section made €510/ac, with a 22ac block being leased for €450/ac. Both of these were rented by dairy farmers.

Stephen Barry of Raymond Potterton Auctioneers in Navan said competition for land had been exacerbated by what he described as a “horrendous” supply situation.

Barry said most properties in the firm’s catchment area from Westmeath to north Co Dublin were making in excess of €300/ac, with €320-330/ac the limit for cereal growers.

“Grass is worth significantly more than tillage ground; and if it’s in an area where it’s wanted then it’ll make €350-400/ac,” he said.

A shortage of suitable properties has also added to the price pressures in the west, according to Roscommon auctioneer John Earley.

“We might get in 10 to 20 new properties in the spring, but we’d do with up to 40,” he said.

Earley said €250-300/ac was the going rate for good grazing ground. Ballina auctioneer Billy Heffron said good grazing ground in north Mayo was making €200-250/ac.