Farmers are more likely to hold on to agricultural land and invest in expansion when a succession plan is in place, according to a new report.

Issues around access in Ireland are once again under the spotlight as a report from the European Commission examines how farms with an identified successor impact on land ownership in Ireland.

Evidence suggests that less than 1% of agricultural land comes to the market each year in Ireland.

Researchers found that there is a "reluctance" by some older farmers to sell land because their future financial situation revolves around farm assets.

According to the new report from the European Commission's Joint Research Centre (JRC) European agriculture, in general, is facing a "continued decline" in the number of farms and young farmers, with limited access to land identified as a major barrier to generational renewal.

According to the JRC Farm succession and land access dynamics report in relation to Ireland the limited volume of land coming up for sale or rent, high sale and rent prices are the key factors chiefly limiting opportunities for new entrants.

The JRC report specifically examined "land access dynamics" by analysing data from Belgian, Irish and Polish farms.

The report highlights various "dynamics" distinguishing between inherited farms - fully or partially transferred - and newly created farms, non-inherited.

Farm size does not necessarily determine land access dynamics before or after farm transfer but in Ireland researchers found that the "succession and successor effects" appear more pronounced among larger farms.

They attributed this to the "higher average profitability of larger farms" - especially dairy farms.

Land

Researchers found that Ireland and Poland show the lowest levels of land renting across the farmer life cycle - on average about 26% and 31% of utilised agricultural area (UAA) respectively.

However, Irish farmers hold the highest total value of land assets per farm due to higher prices and limited availability, especially for purchase, while smaller farm sizes and lower prices in Poland result in the lowest asset values among the three countries studied.

One key trend identified in the report in Ireland is that a recently introduced tax relief for long-term leasing has "somewhat contributed" to an increase in rental in Ireland in more recent years.

Although Belgian farmers report the highest share of rented land across the farmer life cycle - on average almost 70% of UAA -higher prices and larger farm sizes place them at an intermediate level in terms of total asset value per farm.

Assets

When it comes to the value of owned land assets researchers found this tends to increase over time in Belgium and Poland, but in Ireland the value declines.

This according to researchers indicates the "no clear successor effect".

Land renting also showed contrasting patterns, in Ireland and Poland - where ownership is more prevalent - new farmers tend to increase their reliance on renting during the first years after taking over, potentially due to young farmer support and tax relief, while in Belgium, where renting is more common, the share of rented land gradually declines.

One key trend across all three countries is that new farmers tend to rely on loans in the early years to finance land purchases and other investments.

But this reliance on borrowing tends to reduce as the farm stabilises and begins to generate a profit.

Young farmers

Another challenges that unites young farmers in Belgian, Ireland and Poland is that they often face higher land prices and rent compared to more established farmers.

They also do not benefit from "older long-term contracts" which more established farmers would have secured when prices were generally lower.

According to researchers there are a number of reasons for this including:

Weaker bargaining power;
Limited experience;
Weaker local networks.

"Differences in productivity and competitiveness, and land market regulatory frameworks, may also play a role," researchers also highlighted.

Women farmers

According to the Farm succession and land access dynamics - A comparison of the Belgian, Irish and Polish case report, women farmers face more challenges than men do in relation to accessing land.

Researchers found that women farmers not only face "greater barriers" to land expansion but also require specific supports "as they face stronger financial constraints and often pay higher land prices, especially in non-inherited farms".

Researchers from the European Commission's Joint Research Centre said that "significant differences between countries in land access dynamics highlight the need for regionally or nationally tailored policies".