Volume of land sold nationally in steady decline

A decline in the volume of land being sold nationally – a trend evident the past number of quarters – was again pinpointed by its agents, Sherry FitzGerald’s recently released Irish agricultural land market Q3, 2018 review.

33% of agents noted that supply levels fell in Q3. These reports from agents corresponded with recent data issued from the Central Statistics Office (CSO), which illustrated that over the past number of years, the volume of land sold nationally has been in steady decline.

In 2015, 53,860ac sold nationally, in comparison to 32,990ac in 2017, which equates to a fall of 39%. All of the eight NUTS 3 regions noted a decline on the 2015 volume.

According to the CSO figures, the mid-west saw the largest fall in acreage sold over the period. In 2015, approximately 7,600ac sold in the region, while in 2017 just over 2,650ac sold, representing a 65% decrease over a three-year period.

Unclear Outlook

The outlook for the agricultural land market remains distinctly unclear, according to the report.

Brexit continues to loom over the market, as it has done since July 2016. The uncertainty surrounding the exit terms and the distinct possibility of a no-deal scenario continue to impede investment in the market. Fundamentally, much of how the land market will progress in 2019 will hinge on the final approach the UK government takes in its Brexit negotiations.

Teagasc, based on the assumption that there is a return to normal weather conditions, is expecting an increase in farm incomes, the report stated. A decrease in the amount expected to be spent on feed is a primary driver of this increase in income.

However, some increase in input prices is expected, with fertiliser costs expected to rise over 10%.

There is no clear consensus amongst commentators on how milk prices will develop in 2019, but the prevailing opinion appears to be that there will be a decline in milk prices relative to 2018 prices, the report stated.

“Growth in global production is expected to slightly outpace growth in consumption. Domestic production, which has increased significantly the past few years, is expected to grow further.”

Stamp duty relief

The extension of stamp duty relief for young farmers in Budget 2019 for a further three years to the end of 2021, is welcome, and should help transaction activity in the new year, the report stated.

Roseanne De Vere Hunt, head of Sherry FitzGerald country homes, farms and estates, said: “Even against a backdrop of bad weather and increasing talks of the UK leaving the EU without a deal, there has been an increase in farm values in 2018.

“However, going into 2019, the avoidance of a no-deal scenario is vital for the health of both the land market and agricultural industry at large.”