1 Less conacre, more leasing

Speaking with auctioneers around the country, conacre is becoming less popular in a general sense. Landowner are seeing the benefit of up to €40,000 tax relief on a 15-year or more lease and are using this option more frequently. In addition, landowners are attracted to the idea that their land will be treated better by those farming it in the long-term, which is the general perception of long-term leasing arrangements.

2 Slow uptake of leases in the west

While the tax relief introduced in 2015 is encouraging more and more farmers to enter long-term leasing arrangements, farmers in the west have been slower to enter into such agreements, according to auctioneers. Anecdotal evidence suggests older suckler and drystock farmers are more hesitant to commit to a long-term agreement, regardless of the tax reliefs in place.

3 Prices

Dairy farmers are paying an average of €60/ac more for leasing compared to beef and drystock farmers around the country. Almost 75% of dairy farmers are paying over €200/ac for leased land, with over half of these paying over €250/ac. Beef farmers, however, are paying considerably less. Sixty-one per cent of beef and suckler farmers in Ireland are paying €170/ac or less for leasing land, with the typical lease of €150/ac for good grazing ground, depending on location, quality and competition for the parcel.

4 Conacre is predominantly beef farmers

Beef farmers make up the majority of 11-month conacre rents. In an Irish Farmers Journal study of 11-month land rents totalling 1,300 acres, 71% were beef farmers, 14% were dairy farmers and 16% were tillage farmers.

5 Dairy expansion driving price

There is little doubt that the hunger for land is being driven in many parts of Ireland by dairy farmers. With production rising, dairy farmers expanding and more entering the market, the demand for land has grown. With supply for leased land low and demand very high, the willingness to pay top dollar for parcels becomes a necessity.

6 Young farmers influence

For a young farmer entering the market or expanding, leasing has become a popular option. One reason for this is the difficulty experienced by some farmers in getting finance to buy land. Leasing is also preferred to conacre. Long-term leasing can provide young farmers with a degree of certainty for the future.

7 Milk price

The price of milk in 2018 will have an effect on leasing prices. 2017 saw a stellar year for dairy farmers and the ability to pay high prices for leases or to enter into high-priced agreements was largely dictated by a healthy milk cheque. A change or drop to milk prices this year may temper the demand for leasing somewhat.

8 Entitlements

Farmers looking for land to rent or lease to activate surplus entitlements are also another source of competition. The reduction in clawback on the sale of entitlements from 50% to 20% in 2017 encouraged a slight increase in sales with 9,623 entitlements worth about €1.6m sold. This is still a fraction, however, of the total entitlements leased with 118,382 entitlements worth €23.5m leased in 2017. Farmers are likely to remain reluctant to part with entitlements through their sale, meaning demand for land to activate entitlements is expected to continue.