An acre of good land in County Sligo was worth €9,325 last year according to new survey

In 2023, land rental prices increased strongly in Munster (+23% for grazing only) and (+9% for cereal crops) with relatively minor changes for most land types in Leinster and Connacht/Ulster.

While price increases will continue to be driven by high demand and low supply, SCSI auctioneers and valuers say the rate of increase is moderating due to a number of factors including higher interest rates, poor weather conditions and lower farming returns. Teagasc is warning that the impact of the adverse weather on agricultural output, production costs and farm incomes, is a concern and presents an area of uncertainty for the current production year. National average non-residential farmland prices ranged from €6,286 per acre for poor quality land – up 13% from €5,564 in 2022 – to €12,308 per acre for good quality land – up 10% from €11,172 the previous year. 

The survey found that on holdings under 50 acres the average price of an acre of good quality land in Sligo last year was €9,325, down from €9,550 in 2022.

It also found the most expensive land in the country was in Waterford with good quality land on less than 50 acres fetching an average of €20,000 per acre. The land with the lowest value was poor quality land in Mayo where the average price for poor quality land on holding over 100 acres was €2,733 per acre.  According to this year’s survey, after Waterford, the most expensive land on small holdings was in Tipperary, followed by Kildare. The average price of good quality land on holdings of less than 50 acres in Tipperary was €17,539 per acre, followed by Kildare on €16,400. Meath on €16,225, Carlow on €15,750 and Cork on €15,667 round off the top six places.

In Connacht/Ulster, average prices for good land on holdings under 50 acres ranged from a high of €13,400 per acre in Donegal to €7,978 in Leitrim, up from €6,140 the previous year. Prices for poor quality land ranged from an average of €7,750 in Monaghan to €3,833 in Mayo, the lowest price in the country for holdings under 50 acres.

In Sligo the average price of an acre of poor-quality land on holdings less than 50 acres last year was €4,450. Meanwhile the price of an acre of good land in the county on holdings between 50 to 100 acres last year was €8,083 while the price of an acre of good land on holdings over 100 acres was €8,333. The corresponding prices for an acre of poor land were €4,360 and €4,500.

According to the Society of Chartered Surveyors Ireland / Teagasc Agricultural Land Market Review and Outlook Report 2024, the Central Statistics Office data shows that the share of agricultural land, which transacts for sale annually is only around 0.5% and this is one of the main reasons for the strong demand for agricultural land for purchase and rental here. In Munster, land rental values increased on average by 12% last year following on from a 13% rise in 2022. Prices per acre ranged from €297 for grazing only to €389 for potato crops. By contrast in Leinster (excluding Dublin), rental values decreased by 2% following a 9% increase in 2022. Here prices ranged from €249 for grazing only to €429 for potatoes. In Connacht / Ulster, average rents were relatively stable with a 4% increase in average rents for meadowing / silage land to €183 per acre, counterbalanced by a 3% reduction for grazing only land to €157. According to the survey of 129 auctioneers and valuers from all over the country, there wasn’t any significant changes in volume of land sold last year compared to 2022, with executor / probate sales providing the main source of farmland sales. 

Auctioneer John Murphy of Murphy & Sons Ltd in Sligo, said that while demand for land - primarily by dairy farmers - had continued to drive land sales and rental price increases last year, price expectations for 2024 have moderated due to a number of factors.

“We can see this most readily in the rental market which reacts more quickly to economic changes in farming. Last year average rental values increased by just 4.5% across all farming uses despite predictions of double-digit growth similar to that which occurred in 2022. These increases did not materialise due in the main to poorer overall returns in farming and very poor weather conditions which dampened demand from some farming sectors - particularly in Leinster and Connacht / Ulster – and kept a lid on rental inflation.”

“In Munster, which has a higher prevalence of dairy, rental values increased by over 12%. One of the features of the market that is emerging is that some dairy farmers have a demand for land to allow them to adjust their stocking rates to ensure they comply with tighter environmental restrictions relating to water quality.”

“Last year was a very poor one for tillage farmers and with the very poor weather continuing well into 2024, auctioneers and valuers are forecasting a modest average national increase in rental values of just 4% this year, ranging from a 7% increase in Munster to a decrease of 1% in Leinster. Rents in Connacht / Ulster are expected to increase by 6%.”

“While land values are expected to increase again this year, mainly due to an expected improvement in milk prices and strong interest from farmers and investors, the increases are forecast to be an average of 6%, well down on the double-digit growth recorded last year. On a provincial level Leinster, Munster and Connacht/Ulster are projected to experience an increase of land values by 4%, 11% and 5% respectively.”

“Last year over a third of respondents to our survey expected a significant increase in dairy farmers buying land, now 12 months on, that figure has fallen to just 3% of respondents. In addition to the lower milk prices we saw last year, one of the other factors which SCSI auctioneers and valuers referenced was the impact of higher interest rates, particularly on smaller farms that came to the market as buyers are more likely to avail of borrowed funds for these types of holdings in contrast to those purchasing large farms.”

“While dairy farmers are ranked as the number one buyer by 69% of respondents, it is interesting to see that ‘other’, which could also be categorised as ‘investor’, constitutes 20% of buyers. This shows there is clearly interest from buyers in acquiring land for forestry or equine purposes, or individuals with a high net worth seeking to diversify their assets by investing in agricultural land” Mr Murphy said.

Teagasc economist, Dr. Jason Loughrey, said that while milk prices should be higher in 2024, the outlook for the cereals sector remains negative. He highlighted the likely negative impact of recent weather conditions on economic outcomes at farm-level and the uncertainty of the weather conditions for the rest of this production season.

“We have had poor weather for farming since the end of Summer 2023. This has affected the 2023 harvest, cut short the 2023 grazing season, disrupted the planting of winter and spring crops for 2024 and delayed the start of the 2024 grazing season. From an agricultural perspective, weather conditions have been particularly challenging for tillage farming. The wet conditions have also led to higher bedding and feeding/housing costs for those with farm animals and the depletion of fodder reserves on some livestock farms.”

“Milk prices fell by 28% last year from record levels in 2022. Some improvement in milk price is evident in the early months of this year. Overall, a 10% increase in milk prices is forecast for 2024 with the average net margin per litre of milk expected to increase from a relatively low-level of approximately 7 cent per litre last year to 12 cent per litre this year, which is closer to the average of the last decade.”

“Annual average beef prices in 2024 are forecast to be approximately 2% to 3% higher relative to 2023 while the margins on sheep farms are also forecast to increase this year. However, there is particular uncertainty for cattle rearing farms due to the timing of cattle sales. Average heavy lamb prices are about 18 % higher (year-to-date) when compared with the same period in 2023. While pork prices are currently behind 2023 levels, these prices remain high by historical standards.”

“Higher than average heavy rainfall in Q1 2024 has led to very soft ground conditions and water logging and has delayed the planting of crops and the turnout of animals to pasture. While an excess of rainfall has been a problem, farmers will be concerned that improved weather conditions when they arrive, do not then pivot into drought conditions later in the growing season. Therefore, weather and growing conditions this year will play a crucial role in overall farming profitability and could also impact the prices paid for land over the year” Dr Loughrey concluded.