Loan approvals for land purchases increased by 14% last year as demand for land grew, figures from Bank of Ireland show.

Approvals

It approved loans for 27,500ac last year, which was up by 2,300ac on 2017 and a hike of 7,000ac since 2016.

The bank reported a “buoyant market, with improved cashflow on farms, driven especially by the dairy sector”. It accounts for more than half of all new lending in the agriculture sector.

However, loan approvals does not necessarily mean that loans were drawn down. For example, the bank could have approved the same land for three farmers bidding on the same land.

John Farrell, agricultural development manager with Bank of Ireland said the environment for lending is more favourable and the bank was seeing increased demand for land, among dairy farmers in particular. They account for more than 50% of the loan approvals.

He added that despite the challenging conditions on farms throughout 2018, production levels on dairy farms were strong, and increases in grain and straw prices compensated for reduced yields on many arable farms. The bank approved finance of €5,700/ac on average for land, up 11% on the previous year. The average land parcel approved for purchase was 34ac.

The Irish Farmers Journal Land Price Report showed that the average price of land in Ireland was €9,072 in 2018. Farrell said that on average farmers are financing almost half (42%) of the price of land through savings.