Prime arable land on the up: Sherry FitzGerald report
On the back of growth of 0.8% in Q3 and cumulative growth of 1.9% for the opening three quarters of the year, the average per acre price of prime arable land nationally – excluding Dublin – stood at slightly under €11,200/ac, according to Sherry FitzGerald’s Irish agricultural land market Q3, 2018 review. This, the research noted, signified a rise of over €250 in a 12-month period.
Despite crop yields decreasing in the year, farm incomes in the tillage sector grew on the back of a substantial increase in harvest prices in the cereals sector.
Teagasc, in its annual review, estimated that income on tillage farms increased by 20% year-on-year in 2018. This increase was principally a result of a fall in the international cereal stock levels, which subsequently saw the value of Irish harvest prices increase upwards of 30%, the Sherry FitzGerald report stated.
Over both the third quarter, and the first three quarters of 2018, the mid-east witnessed the largest jump in the value of prime arable land, increasing 2.4% in Q3 and 5.3% over a nine-month period.
On a nine-month basis the south-east, followed by the mid-west and south-west saw the next largest increases in prices at 3.6%, 3.5% and 1.5% respectively. Over the same period, the midlands saw prices decline at 0.4%.
Following a robust year in 2017, with strong increases in incomes, 2018 proved to be a much harder year for dairy farmers, the report stated. Costs increased significantly on the back of adverse weather conditions.
The snow in the early part of the year and near drought conditions in the summer resulted in it being a particularly hard opening nine months for farmers in the dairy industry, the research observed.
Despite these adverse conditions, grassland values increased in 2018. Prime grassland on a weighted basis increased by 0.7% in the third quarter, and grew 1.9% over the first three quarters of the year. Grassland values in 2018 were helped by the returns for dairy products keeping on par with 2017 returns.
The Ornua Purchase Price Index indicated that market returns for dairy products in 2018 matched those achieved in 2017 for much of the year before tapering off in October, the research noted.
Over the first nine months of the year values rose the most in the midlands, with growth recorded at 5% in the region over the period. Notable growth was also documented in the mid-west, mid-east and south-east at 3.5%, 3.4% and 2.3% respectively. Growth was also recorded in the south-west but at a slightly more moderate pace of 1.6%.
Again the west noted a drop in the value of farmland, with prime grassland falling 1.1% in Q3 and dropping 3.2% over three quarters, according to the report.
Marginal grassland grew at a much more subdued 0.2% in Q3. Over the first nine months of the year this type of farmland increased 1.2% in value.
At the end of September, on a weighted basis, the average price per acre of prime grassland and marginal grassland, excluding Dublin, stood at approximately €10,500 and €6,150 respectively.
The upward trend seen in buyer sentiment at the start of the year eased off, the report noted. Adverse weather conditions and increasing concerns surrounding Brexit were seen as having likely impacted sentiment. This caused some unease among farmers considering expansion, it was observed.
While 61% of respondents noted that buyer sentiment had remained stable in Q3, there was a slight uptick in the number of agents who reported a deterioration in confidence levels in the quarter. This uptick was largely localised in the border region, where Brexit concerns are more heightened, said the Sherry FitzGerald review.