Next Tuesday, Teagasc is holding a conference on inheritance and land mobility in the RDS. To say it’s an interesting topic in contemporary Ireland is an understatement.

We have seen a dramatic increase in the inheritance tax burden on commercial farms – it’s at confiscatory levels where the inheritor does not intend to farm it or lease it to a qualified farmer and the question of whether a “use it or lose it” policy in relation to agricultural land is a fundamental political choice.

But the potential effects of the new rules are profound. One of the key questions, in a Europe that is dismantling rather than increasing inheritance taxes on agricultural land, is whether the sector can easily bear even a small proportion of the capital value of agricultural land as it passes from one generation to the next.

It’s worthwhile having a look at what has happened to agricultural land prices – how has agricultural land gone in value terms since we joined the EU/EEC in 1973?

With the invaluable help of the Central Statistics Office, I have looked at the performance of average agricultural land prices from 1974 to 2005. As the Irish boom accelerated and spilled over into land prices, the CSO suspended the compilation of agricultural land prices and only started again this year, so, for the years after 2005, I have relied on Shirley Busteed and the Irish Farmers Journal Land Report.

This has become recognised as the definitive guide to Irish farmland prices and I have stuck with it from 2006 to 2013. I have covered the 40 years of EU membership in five-year tranches except for the extraordinary year of 2006 when all land prices reached extraordinary heights.

So, what do we find? Broadly, farm land has not, since EU entry, been a good investment. It has been an investment that, in capital terms, has not kept pace with the Common Price Index. I must emphasise that the income generated by the land has not been taken into account in these calculations.

The graph speaks for itself. Only in the boom period, of which 2006 was the peak, has the value of agricultural land kept pace with inflation.

Capital value

So, even in Ireland with a tiny proportion of land offered for sale each year and farm family earnings augmented by off-farm income, agricultural land has not remotely held its capital value.

What are the conclusions we should draw? The most basic one is that, in general, agricultural land prices should reflect agricultural profits. It is no secret that agricultural profits and prices are continually under pressure. We have seen a stagnation in incomes despite increases in output and value. It is clear that the value of extra output is being retained by other players in the chain. The argument for informed government involvement in the sector is overwhelming.

It would also be interesting to see how other asset classes - shares, commercial property, etc, have performed over the same 40-year stretch.