When looking at the factors driving demand for land, be it purchase, lease or rent, much of the discussions of late have centred on changes to Ireland’s Nitrates Derogation and possible future changes to Ireland’s Nitrates Action Programme.

However, changes introduced to the Common Agricultural Policy (CAP), via the CAP Strategic Plan 2023-2027, look to be also significantly influencing demand for land.

The new Complementary Income Support for Young Farmers (CIS-YF) scheme saw payment rates more than double, rising by 150% to a target payment of €170/ha.

A farmer drawing down payment on the maximum area of 50ha stands to potentially receive €8,500 per annum with payments lasting for five years.

This level of payment is having a massive influence in areas with more marginal lands and in particular has inserted much more life in to the market for hill and mountain land.

CIS-YF applications

The attractiveness of the payment is reflected in the number of CIS-YF applications which was 6,900 in 2023 leading the scheme being oversubscribed. This reduced the payment rate to €158/ha but there is no doubt that there will be strong interest again in 2024 in young farmers sourcing land.

A significant increase in funding under the Organic Farming Scheme (OFS), with some €256m allocated over the lifetime of the next CAP, along with changes to eligibility criteria has also seen interest grow in sourcing lands for inclusion in this scheme.

The fact that the minimum stocking rate has reduced to 0.1LU/ha has fuelled a spike in interest in enclosed hill and mountain areas, along with a higher level of payment now extended to a larger area.

A farmer with a holding of 35ha and availing of payments under the CIS-YF, National Reserve and OFS (drystock) would receive approximately €21,850 in year 1, €21,250 in year two and over €19,500 from year three to five.

This is not factoring in possible payment of approximately €3,000 under the Areas of Natural Constraint, €1,500 under the Complementary Redistributive Income Support for Sustainability and €2,345 under the Eco Scheme.

As such it is easy to see why demand for land has jumped in some areas and why some auctioneers are reporting that the schemes have put a new floor under the value of hill and mountain areas.

The payments are also said to be a contributing factor for interest cooling in forestry although reports indicate the licencing debacle and replanting obligation remain the greatest issues.

Trading of entitlements

There is likely to be greater interest in the trading of entitlements in 2024 and in particular to the sale of entitlements without lands. The Department of Agriculture introduced an amnesty in 2023 on the current clawback of 20% on entitlements sold without lands. This means that entitlements can be sold with the full value changing hands.

As it stands the 20% clawback rule on the sale of entitlements without lands will return in 2025 and be present again in 2026 and 2027. Many farmers considering selling entitlements without lands held tight in 2023 and leased out their entitlements for the year in order to see what way the trade unfolded.

This follows major changes to the value of entitlements with historical entitlement values further eroded by a move to 85% convergence and the payment of the Eco Scheme and CRISS payments on an eligible hectare, breaking the link to entitlements.

The introduction of a minimum stocking rate or active farmer clause is also said to be encouraging some farmers to consider trading their entitlements. The fact that 2024 is the final year of the amnesty is likely to lead to greater interest in sales of entitlements in 2024.