Among the changes made by the European Union to the Nitrates Action Programme (NAP) is the introduction of banding this year on Irish dairy farms.
The move is part of a series of stronger measures being implemented by the EU to protect water quality, including the extension of the closed periods for slurry spreading.
Prior to the introduction of banding, each dairy cow in the country was assigned a standard excretion rate of 89kg of nitrogen (N)/head.
The revised method to calculate nitrates at farm level is being implemented this year to provide a more accurate nitrates figure for individual farms.
This means that herds will now be placed in one of three excretion bands depending on their average milk yield.
These three bands are as follows:
An in-depth analysis on how the introduction of banding for dairy farms could impact on the Irish land market this year is contained in a new report published today (Tuesday, April 25).
The Agricultural Land Market Review and Outlook Report 2023 from the Society of Chartered Surveyors Ireland (SCSI) and Teagasc predicts that the price of agricultural land will increase by 8% on average this year.
The report, which is based on a survey of 134 SCSI members across the country, shows that national rental prices are expected to jump by 14% in 2023.
Banding
Recent Teagasc data shows that around one fifth of specialist dairy farms in 2021 had milk yields above 6,500kg/cow and would therefore be in the highest band.
The implications of banding will be most keenly felt by farms in the highest band who will either need to increase their land area or reduce milk production in the short term in order to comply with the new regulations.
According to today’s report, farmers in the highest band are expected to increase their willingness to pay for land in order to secure access to the additional leased ground for the medium and longer term.
“This is purely a demand for additional land to adhere with regulatory requirements, whereas previous demands for additional land were often motivated by a desire to expand herd size to increase milk production,” the report states.
Through their analysis of two case studies, the authors of the report note that the impact of banding on the land market will vary by region and perhaps even by locality.
The potential for larger land rental price increases is expected to be more acute where dairy is the dominant farm enterprise and stocking rates are high.
The situation could be further exacerbated in places where few landowners are willing to rent out additional land.
“Many medium and long-term land lease contracts are fixed in price until the contract comes to an end.
“However, the banding policy could eventually impact the price of these previously arranged land leases,” the report said.
Banding is also likely to impact on the land sales market, the report states.
“Relatively small additional parcels can help dairy farmers to limit the impact of the policy change on production levels. However, the challenge is particularly acute for those dairy farmers operating in the highest banding category.
“In addition, young and new entrant farmers may face even higher land prices in places where there is a high concentration of these dairy farms,” the report said.