Land Report: farm succession challenge is a factor in land prices

According to the Central Statistics Office (CSO), as of 2023, just 46.5% of farmholders have a succession plan in place, indicating that more than half of Irish farmers have not yet formalised plans for the future of their holdings.

This lack of succession planning contributes to notable trends in land prices across the country, with increased leasing and segmentation of larger land parcels being seen by auctioneers.

Farmers without a clear succession plan may opt to sell their land, increasing the supply in the market. And demand for agricultural land remains robust, driven by factors such as the expansion of existing farms, investment interests and alternative uses, like renewable energy projects.

However, lack of succession planning can also lead to fragmented land parcels, as estates are divided among multiple heirs. This fragmentation can reduce the overall productivity and value of the land, affecting local land markets.

Long-term leasing increases

Land leasing is also a key consideration for farmers.

Teagasc’s 2024 small farmer survey revealed that over one quarter of the country’s 48,000 small farmers are planning to lease out their farms in the next five years. This would see 425,000ac coming onto the land-leasing market, as reported previously by the Irish Farmers Journal.

According to auctioneers around the country, they have witnessed a rise in long-term leasing.

Eamonn O’Brien is an auctioneer with over 20 years of experience working in Cork Co-op Marts (CCM) property. He says: “The trend of professionals leasing land for tax-free income is growing, with retiring farmers preferring to lease their land to maintain income streams. Along with this, it can be more cost-effective for younger farmers to rent than buy.”

There are also more examples of land being transferred but farmers keeping the right of maintenance for themselves or an exclusive right of residence in the family home.

“People are re-inventing the wheel through good tax advice on how best to do it,” says Eamonn.

Challenges facing young farmers

At the generation renewal consultation organised by Macra in January, many young farmers shared frustration at land prices being driven by non-agricultural buyers and bigger investors.

Access to land has been an increasing problem and a barrier for new entrants and existing farmers. To allow collaboration on decisions between new entrants and retiring farmers, a transition period is being sought by Macra, with the need for succession and retirement schemes to be considered.

According to members at the consultation, this transition period would allow for land ownership and decision-making responsibilities to be shared.

A bigger tax incentive for a farmer to lease their land to a new entrant or someone under the age of 35 would help cap the prices and provide more available land, according to Brian Fitzpatrick, a young dairy farmer from Co Kildare.

As a young guy starting out, the only chance I’d have is if something came up privately. Then I might be able to approach the landowner before it hits the market

“I have no home farm at all, I haven’t an acre to my name. The biggest barrier for me was I wanted to carve a career in dairy, and I hadn’t a clue how to go about that. There’s very little information on that, or on how to access land,” he says.

He also found there is a big gap in available information. Although there is the land mobility service run through Macra, he doesn’t think it is utilised enough.

“It’s very daunting [starting out] and everyone thinks that to get into farming you need a couple of hundred acres behind you. It probably scares off a lot of people who either stay within the industry in another capacity or just go outside it again for work,” says Brian.

As a farm manager, working on Peter and Jenny Young’s farm in Athy for two years, Brian has had the opportunity to buy a few heifer calves. Over the last three years he has built up some equity, with 65 cows that are leased into the business.

“In the next two or three years, we’re looking at increasing, because at the moment, it’s not worth going into a shared farm with the numbers I have, but it’s a stepping stone,” he says.

As someone who is currently looking to buy a block of land himself, Brian says it’s nearly impossible, as he is competing with tillage and vegetable farmers between Athy and Kilcullen: “It’s hard to get anything, if it comes up everyone is competing against you. As a young guy starting out, the only chance I’d have is if something came up privately. Then I might be able to approach the landowner before it hits the market.”