Almost 70% of land purchases are made by dairy farmers according to a report just published by the Society of Chartered Surveyors Ireland (SCSI) and Teagasc.
The ‘Annual Agricultural Land Market Review & Outlook 2024’ offers insights into land selling prices and rental rates, highlighting key trends within the land market.
This survey was completed by chartered surveyors operating in the auctioning, private treaty sale, tendering and land rental transactions, including those who provide specialist valuation services to clients.
Dairy sector
The number one main buyer type for grassland were dairy farmers, with 69% of respondents reporting this as the buyer type, followed by tillage farmers (11%).
20% of respondents to the SCSI/Teagasc review reported ‘other’ as a buyer type. ‘Other’ is referred to by many respondents as an investor or hobby farmer.
A total of 56% of respondents expect a moderate or significant demand from dairy farmers to buy land in 2024, down from 83% of agents in 2023.
Dairy farms utilise about one-quarter of the grassland area in Ireland and are most prominent in the eastern half of Munster and in the southern counties of Leinster, according to the report.
In 2023, milk prices decreased, particularly during the second half of the year. As a result, the annual average national milk price for 2023 was 28% lower relative to 2022, with the standardised price for the year as a whole estimated to be 39c/L (43.1c/L on an actual constituent basis).
The report adds that Irish milk production is estimated to have declined by 4.1% in 2023 relative to 2022.
Much of the annual decline in milk production can be attributed to reduced production in the final four months of 2023 relative to the same period in 2022, Teagasc and SCSI stated.
On a per litre basis, milk production costs are estimated to have been similar in 2023 relative to 2022.
It is estimated that the net margin per litre of milk produced decreased by 71% to 7.1c/L in 2023, reflecting the sharp drop in milk prices, the report added.
Outlook
In terms of the dairy sector’s ability to purchase land going forward, the review by SCSI and Teagasc stated that milk prices have begun to increase in early 2024.
A 10% increase in milk price is forecast for 2024, which would bring the actual annual average milk price to 47.4c/L (the standardised price of 42.9c/L).
The average net margin/L of milk is expected to increase from approximately 7c/L in 2023 to approximately 12c/L in 2024, according to the report.
Declines in feed and fertiliser prices are helping to reduce overall costs, although prices for both inputs remain above 2021 levels, the two organisations have said.
A prolonged winter resulted in higher feed use and a negative impact on milk yields.
Based on the latest monthly Central Statistics Office (CSO) milk statistics data, there is the possibility of lower national milk production in 2024 relative to 2023.
The recent changes to environmental policy aimed at protecting water quality as part of the Nitrates Directive will continue to limit the extent of growth in overall milk production in 2024, the report stated.