Land-leasing costs are holding at record high levels across the south, despite the recent milk price cuts.

Dairy farmers were again to the fore in land letting auctions in Kilkenny over the weekend, paying between €400/ac and €500/ac for five-year leases of grazing ground.

The sharp reduction in milk prices announced over the last week and the likelihood of more cuts to follow through the spring has done little to curb demand for land among dairy farmers.

Castlecomer auctioneer Joe Coogan leased three blocks of land by public auction last Friday.

A 22.75ac section of land at Castlewarren near Clara, Co Kilkenny, was leased by a dairy farmer for €400/ac. A further 6.25ac in the same area was let for €430/ac.

High figure

Meanwhile, a 55.75ac holding at Dunmore outside Kilkenny city was withdrawn at €440/ac. It was later leased by a dairy farmer for what Coogan described as a “significantly higher figure”.

The rental price is understood locally to have been close to €500/ac.

Dairy farmers have been the primary drivers of the land leasing market this year, with new nitrates banding and lower stocking rate rules forcing milk suppliers into either taking extra land or cutting cow numbers.

While it was felt that the recent milk price cut, which saw base prices fall by 5c to 6c/l to 50c to 52c/l, might take the heat out of the land market, the Kilkenny auctions confirm this is not the case.

Farmers will always opt to pay an extra €100/ac for land when it allows them to keep a cow

Mitchelstown auctioneer Eamonn O’Brien maintained that dairy farmers will continue to pay a premium for land rather than reduce cows numbers.

He said farmers will always opt to pay an extra €100/ac for land when it allows them to keep a cow that will generate an additional €3,000 of income.

Strong demand

The fact that the vast majority of leases are for now for five, seven or 10 years was a further reason, he said.

The Mitchelstown auctioneer maintained that dairy farmers had already “factored in” the milk price drop and that demand for land was “as strong as ever”.

O’Brien pointed out that he let a farm recently for €400/ac to a dairy farmer, with the value of the entitlements returning to the landowner.

He said tillage land in east Cork is currently making over €450/ac, with intense competition between grain growers and dairy farmers driving prices.