A survey of auctioneers has found that a majority expect Leinster to buck an expected nationwide trend of rising land rental costs in 2024.
Land rental costs in Leinster are anticipated to fall by 1%, while prices are forecast by auctioneers to rise an average of 4% across all regions.
The cost of rented land in Munster is expected to increase by 7%, with the equivalent rise corresponding to 6% in Connacht/Ulster.
The poll was conducted by the 129 auctioneers and valuers from all over the country, the results of which were published in the Society of Chartered Surveyors Ireland (SCSI)/Teagasc Agricultural Land Market Review and Outlook Report 2024.
Dairy demand slowing
The auctioneers expect high interest rates, poor weather conditions and lower farm margins to be dampening the rise in land rental costs witnessed over successive years.
While dairy farmer demand had been the driver of land sale and rental deals in 2023, these factors are moderating the market this year, according to SCSI’s rural committee chair Peter Murtagh.
“We can see this most readily in the rental market, which reacts more quickly to economic changes in farming,” Murtagh said.
“Last year, average rental values increased by just 4.5% across all farming uses, despite predictions of double-digit growth similar to that which occurred in 2022.
“These increases did not materialise due in the main to poorer overall returns in farming and very poor weather conditions, which dampened demand from some farming sectors - particularly in Leinster and Connacht and Ulster – and kept a lid on rental inflation.”
In dairy-strong Munster, SCSI is reporting that farmers are using the route of increasing land area to comply with tightening nitrates restrictions.
Land rental values rose 12% in Munster from 2022 to 2023.
However, despite this trend, over one-third of the agents surveyed last year expected a lift in the number of dairy farmers looking to source additional land and this figure plummeted to only 3% this year.
The report also outlined Teagasc analysis on the area of land which will be needed for the State to reach its 2030 renewable energy targets.
It states that up to 120,000ha will be needed to supply the biomethane sector, alongside another 2,000ha for onshore wind turbines and 16,000ha for solar energy.
Teagasc outlook
Teagasc economist Dr Jason Loughrey added sectoral outlooks to the report and while milk price recovery is anticipated over 2024, the tillage forecast remained more down beat.
Loughrey pointed out that inclement weather over the first three months of this year came after a challenging end to 2023 on the grazing and winter cropping fronts.
This weather uncertainty could play into the land market if farmer uncertainty around profitability dents confidence on land bidding, he suggested.
“We have had poor weather for farming since the end of summer 2023. This has affected the 2023 harvest, cut short the 2023 grazing season, disrupted the planting of winter and spring crops for 2024 and delayed the start of the 2024 grazing season,” the economist stated.
“From an agricultural perspective, weather conditions have been particularly challenging for tillage farming. The wet conditions have also led to higher bedding and feeding or housing costs for those with farm animals and the depletion of fodder reserves on some livestock farms.
“While an excess of rainfall has been a problem, farmers will be concerned that improved weather conditions when they arrive do not then pivot into drought conditions later in the growing season.
“Therefore, weather and growing conditions this year will play a crucial role in overall farming profitability and could also impact the prices paid for land over the year,” he said.
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