The farm land market had a buoyant 2022 with supply and prices up.

This was despite uncertainties at home and abroad. The number of farms on the market was up, the number of acres for sale was up and the amount of land sold was up – albeit modestly in each case. Average price increased by almost 3% – to €12,288/ac – also a modest increase. But it was a satisfactory outcome to the year for many.

Auctioneers and others involved in farm property tend to be optimistic by nature. But there were valid concerns at the start of the year: war in eastern Europe, interest rates rising and weekly forecasts of recession.

The year got off to a promising start with a number of good farm auctions. It became clear that demand was strong and there were multiple customers for many farms. Most holdings put up for auction were selling.

It soon became clear that dairy farmers were actively chasing extra land. Milk prices strengthened through 2022, boosting confidence. New entrant dairy farmers, just three or four years into milking cows, were bidding on additional land. “The dairy farmer who was not able to buy land two or three years ago is now in a position to buy land,” one auctioneer commented in early summer. “It’s giving dairy great confidence,” the auctioneer said. “They have a massive turnover of cash. One large dairy farmer gave €1m for a farm – he said with milk at up to 70c/l he would have it half paid for in one year. Dairy farmers were always asset rich. Now they are asset and cash rich.”

Non-farmer buyers were also active last year. Rising inflation pushed more investors to look at putting their cash into land, rather than leaving it sitting in the bank.

The buoyant market was confirmed by the sale of a number of high-value stud farms and country estates. There were several underbidders for Lumville Farm at Edenderry, Co Offaly, which was sold under the hammer by Coonan Property for €6.8m. “There were five or six individuals in the room with €6m in their pockets,” one of the auctioneers said afterwards. On the day auctioneer Padraig Murtagh of James L Murtagh did the bidding on behalf of the buyer, an established equine operation.

But there were farmer customers, too, for big holdings that made over the €1m mark, mostly well-established dairy farmers. “We’re seeing second sons and daughters now looking to set up a new dairy operation,” was the comment of one auctioneer.

Some of the best farms were bought by farmers who sold land on the edge of expanding towns, who now have financial firepower and who want to reinvest in farmland.

A number of auctioneers reported that banks have become slower to approve applications for land loans. This can delay the closing of a transaction. “The local bank manager is now only a messenger boy for headquarters,” one auctioneer commented.

As the year went on, new issues came into focus. The Government announced a new forestry strategy envisaging 18% of the country under trees by 2050.

A new forestry programme was announced with premiums increased by up to 68% on the outgoing programme. In addition, the payment period for premia is being increased from 15 to 20 years.

The announcements boosted interest in planting land and saw prices increase. Auctioneers expect that the price of planting land will continue to increase through 2023.

In midsummer it became clear that dairy farmers would have to acquire significant additional land if they want to avoid cutting dairy cow numbers. This is a consequence of the latest rules under the Nitrates Directive.

Half of the 6,800 dairy farmers who were in a Nitrates derogation last year will have to acquire extra land or reduce cow numbers. The IFA has calculated that they must access an additional 70,000ac or reduce cow numbers by 55,000 head.

However, there is a mismatch facing us in that the areas where land is most likely to become available in the next few years are not the same areas where the dairy herds are.

Not surprisingly, some auctioneers reported that demand for land and prices increased in the second half of the year.

Leased land prices

Auctioneer Jim Coogan made the headlines when land he auctioned for leasing broke through the €500/ac mark. There was some disbelief, with claims it was a one-off, etc. However, as he pointed out, there were several underbidders prepared to pay just €10 or €15 less per acre.

As we moved on through the autumn there were more reports of dairy farmers agreeing €400/ac and €500/ac to lease land for five or more years. Now there are reports of €600/ac being agreed.

The higher rent levels that are emerging are putting a new value on land. We are now likely to see a reassessment of land costs. Renting ground for €500/ac could still be a sound business decision if the purchase price of the same land is upwards of €20,000/ac. It could also make financial sense if the alternative is cutting milk sales.

The higher rents will tempt more landowners to look at leasing out their farms. Over the next few years this could lead to some reshaping of the use and ownership of farmland.

Some auctioneers suggest that supply of land for sale may in fact be impacted by high rental prices. An older landowner may decide to lease out the farm and leave any decision on a sale to the next generation.

Buying for nature, not farming

There are other customers for land regarded as disadvantaged and marginal. Last year also saw more reports of land purchased by individuals or organisations for rewilding or in some other way using it for protection of nature.

It’s possible that land has sold every year to buyers with such plans, but we just didn’t hear about it. More likely that this is an emerging trend that will grow over coming years. New competition is developing for more marginal land.

As we move through 2023, the picture is of continuing strong demand for farmland. Nitrates banding is in place. This year the lower stocking limits will start to squeeze dairy farmers. We can expect dairy farmers to continue looking for land to buy or lease.

Interest from non-farmers and investors remains strong. There is still little interest to be got on savings in the banks. Families are selling off rental homes and some of them will look at farmland instead. Rural properties with a residence will continue to be in high demand.

Looking at the supply figures, at national level the number of farms offered on the market was 870, an 8% increase on the 803 of the year before. The total area involved was 42,645ac, a 5% increase on the total of 2021.

Again, nationally, just over half of holdings put up for sale were under 40ac and 90% were under 100ac. Last year, 63 farms of 100ac to 200ac were put up for sale and 16 farms of over 200ac.

Just over a quarter of holdings were residential, nearly three-quarters were non-residential.

Two-thirds of the farms on the market were offered by private treaty, one-third were put up for public auction.

Supply in the different provinces

Three-quarters of all farms for sale were in Leinster and Munster. Together they had 665 of the 870 holdings that came on the market. There were 135 in Connacht and 70 in the three Ulster counties.

Holdings were biggest in Munster, averaging 54ac. The average was 49ac in Leinster, 41ac in Connacht and 40ac in Ulster.

Supply in different counties

The supply of land for sale at county level tends to be stable from year to year. The big counties including Cork, Tipperary, Meath, Westmeath and Galway tend to have the most farms and acres for sale.

That was the pattern in 2022: Cork had 100 farms – Tipperary 83, Meath 60, Limerick 52 and Galway 49. The number of acres for sale mirrored these figures.

The counties with the lowest supply of farmland for sale usually include Dublin, Louth, Carlow and Leitrim. That pattern was also to be seen in 2022. Dublin had the lowest number of holdings for sale at seven followed by Mayo (10), Louth (11), Clare (15) and Carlow (16).

Preference for public auction or private treaty sale tends to be consistent from year to year in any area or county. The counties where public auctions are most popular include Tipperary, Meath, Westmeath, Wexford, Kildare and Wicklow.

The counties with the most auctions last year were Meath (35), Tipperary (29), Westmeath (26), Kildare (25), Wexford (23) and Wicklow (20). The counties with the fewest auctions of farmland were Dublin, Donegal, Mayo, Leitrim and Sligo.

Numbers sold

The number of farms that sold was 678, which was just over three-quarters (78%) of the total put on the market. The total area of land sold was 32,823ac which was very similar at 77% of what was offered for sale.

There was some variation around the provinces:

The counties with the highest numbers of farms sold by year end were Cork (77), Tipperary (56), Meath (49), Limerick (40) and Westmeath (35).

Nationally, 460 farms of under 40ac were put up for sale and 81% (373) of them were sold by year end.

Nationally, 410 farms over 4ac were put up for sale and 74% (305) were sold by year end.

Average land price rose by 2.7% to €12,288/ac. The average of the previous year was €11,966.

Prices varied widely around the country. The province with the most expensive land is Leinster where the average is €13,776. Next comes Munster where the average is €12,860/ac. After that is Ulster with an average of €10,519 and finally Connacht with an average of €8,170.

At county level, the most expensive farmland is in counties Dublin, Carlow, Kildare, Wicklow and Kilkenny. The least expensive land in is counties Leitrim, Cavan, Sligo, Longford and Mayo.

The biggest increases in farmland prices in 2022 were in Mayo (up 78%), Carlow (up 28%), Galway (up 22%), Louth (up 21%), Monaghan (up 23%) and Wicklow (up by 23%).

The biggest decreases in prices were in Clare (down by 23%), Kerry (down 19%) and Meath (down 21%) and Sligo (down by 11%).

As in recent years, the business category was the dominant purchaser of land, acquiring 43% of holdings. This category includes business owners, investors and farmers with substantial off-farm income. Dairy farmers acquired 26% of farms and holdings that sold.

Drystock cattle farmers purchased 14% of the farms that sold. Other buyer groups trailed significantly behind, including sheep farmers, tillage farmers and mixed enterprise farmers.

Within these figures, it was noticeable that dairy farmers bought a significant share of the larger farms that sold.