Dairy boom driving surge in land loans

LOANS for land sales have surged by 30pc, with the size of the parcels up by a quarter, according to figures released by Bank of Ireland.

The lender found the average loan approval increased by 2pc to €5,100/ac during 2017, with the average size of farmland approved for purchase standing at around 30ac.

The greatest demand for funding came from counties Cork, Tipperary and Westmeath.

It also concurs with a survey carried out by the Farming Independent which found strong sales in those counties, along with Tipperary.

Over €17,000/ac was paid for a 130ac farm in Golden, which was a premium per acre price for such a large holding.

Clonmel auctioneer John Fitzgerald of Dougan Fitzgerald said there is more activity in the Tipperary land market.

“We are doing quite a lot of land valuation for the banks at the moment and this is not a simple task,” he said. “The dairy farmer is the most active customer but valuations are being done for customers across the sectors including tillage farmers.”

Across the border in Cork Mick Barry of Fermoy auctioneers Dick Barry & Son, described sales and land valuations as “much busier”. “It is no simple matter buying land nowadays, it is not a enough to have a good relationship with the local bank manager. You have to have a detailed business plan with five-year projections and the land has to be valued in detail,” he said.

He said that despite the complicated process to borrow money, there is still much more activity in land sales.

Bank of Ireland said it also received a significant number of farm development finance applications last year.

It pointed out that a large proportion were weighted towards dairy, however, finance was also sought across beef, tillage, sheep, pig and poultry sectors for building upgrades, renovations and machinery.

Sean Farrell, head of agriculture at the bank, said it was a positive period for much of the agri-sector which helped fuel confidence and appetite for expansion, particularly for the dairy sector.

He said the record year for milk production and higher farmgate prices had resulted in higher cash flows and lower overdraft usage.

“Despite the threat of Brexit, agri enterprises are expanding where and when they can to maintain productivity, drive efficiency levels and enhance capability for the future,” he said.

Mr Farrell said they expected to see continued expansion this year but a “rebalancing” of dairy with a reduction in milk prices, while there will be further growth in beef supplies.