Plenty of succour in ‘the land’ in these testing times – IPAV

Land prices are holding up well across the country despite a “torrid year” dominated by both Brexit and the unexpected upheaval that was the Covid-19 pandemic, according to the latest farming report from the Institute of Professional Auctioneers and Valuers (IPAV).

Average prices of agricultural land in Westmeath were in the region of €9,000 per acre in 2020, depending on quality. In neighbouring Meath, the price range was between €8,500 and €20,000 per acre, while in Cavan, it stood between €6,500 and €8,000 per acre.

“Land is proving itself to be ‘COVID proof’,” says Delvin man Stephen Barry, of Raymond Potterton and Co. Auctioneers in Navan. “Rents continued to be paid throughout the year.

“Its safety as an asset class was highlighted and demand literally soared.”

Alan Bracken, MIPAV, of Sherry FitzGerald Davitt and Davitt, Mullingar, experienced a good supply of land coming to the market in the Westmeath/Midlands region in the latter part of 2020.

“Some sales had been postponed from the spring,” the report read. “He [Alan] has seen the value of lands in close proximity to dairy enterprises increase, as neighbouring farmers look to consolidate their holdings and to reduce the distance required in moving the herd each day.

“He has also seen a good demand with limited supply for both forestry and tillage land in the general area.

“As a result of COVID-19 he does anticipate an increase in poultry enterprises. The general growth in poultry meat production is expected to continue into 2021 reflecting the shift in demand from other meats to poultry, as European economies and consumers struggle in response to the pandemic.”

The IPAV report found that 2020 was a “tough year” for tillage due to lower yields the prevailing weather (an “exceptionally dry period” during the winter followed by a very wet autumn), but that the sheep and forestry sectors held their own. Consumption of lamb increased in Ireland in 2020, and native suppliers were helped by a reduction in competition from New Zealand lamb due to NZ’s increased focus on the huge Chinese market.

Forestry land values held up at c. €5,000 per acre, although delays in issuing felling licences developed into something of crisis in 2020, and prices increased by between 30-40pc for small to medium logs, due to a temporary lack of supply.

Opportunities

Mullingar man Pat Davitt, CEO of IPAV, said that the impact of developments such as Covid-19 and Brexit has created as many opportunities for rural life as it has challenges.

“The COVID-19 pandemic has had the disruptive effect of more workers seeing living and working in rural Ireland as a realistic and achievable ambition,” said Mr Davitt.

“We’ve seen the return home of many of our exiles and while they cannot survive on farm income alone, the opportunities for off farm income have greatly increased arising from the acceleration in working from home. This will help the viability of small farms and help to keep the tradition of the small farmer alive.

“Auctioneers are also seeing an increase in demand for rural properties from those living in the cities. The recent Government announcement that it intends legislating to give people the right to ask their employers to work from home beyond the end of the pandemic is to be welcomed.

“The bottom line is demand for land remains strong, however the amount of agricultural land sold each year is small and has been falling as attested to by the Central Statistics Office.”

However, Mr Davitt stated that the age profile of farmers is on “the high side”, with one-third of farmers over the age of 66. Young farmers will be needed to drive the Green Economy, but are hampered not only by the fact that long-term leasing is their only viable option for running a farm, but also by the decision to hike stamp duty up to 7.5pc.

“On a positive note there may be opportunities in the new scenario for Irish agriculture and the agri-food sector in terms of import substitution,” Mr Davitt added.

“Overall the trends emerging will help breathe new life into our rural towns and villages and augurs very well indeed for the future of rural residential holdings and land values.”

Although uncertainty faces farmers in Westmeath and Ireland as a whole as a result of the persistence of Covid-19, the challenging vaccine roll-out and the bedding in of a “new, less profitable trading relationship” with the UK as a result of Brexit, Ireland has a strong umbrella with which to weather the storm.

“Values have proven remarkably robust over recent years and there is every likelihood that this will continue to be the case,” the report concluded. “Lack of supply will continue to sustain values. There is no evidence that this phenomenon is likely to change. If anything, supply will tighten further.

“Securing finance remains a challenge especially for full time farmers, without an additional income stream. Interest rates remain remarkably low and in light of the current international climate, this also is unlikely to change.

“Historically in times of strife ‘the land’ has proven a resilient place for a market lacking in confidence. This will continue.”