Dairy farmers need to determine if additional land is going to be profitable for their enterprise before making decisions.
Speaking at the Irish Creamery Milk Suppliers Association (ICMSA) meeting in Cavan on Monday, January 22, Dr. Joe Patton, head of knowledge transfer with Teagasc, told farmers that they need to do the sums on land before completing a deal.
Patton noted that the price that farmers are able to pay for land will vary from farm-to-farm.
Additional land
The prices that some farmers are agreeing for land has been highlighted over the last couple of years, as dairy farmers prepared for the drop in the maximum stocking rate under the nitrates derogation and the introduction of banding.
Speaking at the event in Co. Cavan, Dr. Patton said that the value of agricultural land should now be lower, due to the reduction in the maximum stocking rate allowed under the nitrates derogation.
Dr. Patton said that he was not going to place a price on land in Co. Cavan, but: “If we think about this logically, if we cut our maximum organic stocking rate from 250kg back to 220kg, what’s the real affect of that?
“The stock carrying capacity of the land reduces, so the capacity of each individual acre to produce milk, beef or whatever it is, is down.”
The head of knowledge transfer said that the land should be worth less, while some farmers have been paying more for an asset that can not produce as much as it used to.
“So, if the maximum stocking rate drops again, the price of land should plummet, but what are we going to do?,” he added.
He stressed that is vitally important that farmers do the numbers on land before they purchase, lease or rent land.
Dr. Patton explained how some farmers have walked away from land deals in recent weeks after they did the sums on the land, and the impact that it would have on the farms profitability.