So what if most farmers can’t afford to buy land?

IN recent months the market for land in Ireland has thrown off the shackles of the recession and burst into action. Analysis of public auctions for the first six months of the year show an increase of 8pc paid for an acre of land when compared to last year.

A recent Central Statistics Office (CSO) land report showed that in 2017 there were 32,990 acres of land sold in Ireland for a combined total of €161million. The area sold was down 2.9pc on 2016, but the amount sold annually in this country is just a drop in the ocean of 11 million acres used for agricultural purposes.

This minute volume of annual land sales (0.3pc) puts into perspective the uproar over high-profile purchases of land by land speculators and successful dairy farmer and equine interests.

In fact, if one person purchased all the land available for sale in the country it would take 333 years to buy the entire country, based on 2017 figures!

It was recently reported that vulture funds control in excess of 28,000 acres throughout the country, and the mainstream banks probably control a lot more.

While I accept this a terrible situation for the individual farmers who are in financial difficulty, is it really of any concern to the State if all of this land was purchased by one anonymous individual in an online auction?

All farmers would love to buy the farm next door, but the harsh reality is that most can’t afford this holy grail.

The income earning capacity of the average farm business, regardless of whether it’s dairy, beef, sheep, arable or equine, is nowhere near enough to even consider buying land.

The National Farm Survey highlights this fact, calculating the average Family Farm Income (FFI) for 2017 at just €31,412.

So, who can afford to buy land, if the majority of farmers cannot afford to buy it?

In my experience the following categories of people purchase land in Ireland:

Farmers who sell development land

Most farmers who sell land for housing or commercial development reinvest most of the proceeds back into land. It is what they know and understand.

To the outside observer they are just ordinar y farmers, but many are canny investors who look at the long-term development potential of the land — and the capital appreciation over time is just as important as the annual farm income.

Farmers whose land is subject to CPOs

Farmers whose land is acquired by Compulsory Purchase Order (CPO) for roads etc usually get ready cash for reinvestment into land.

When the economy is going well, taxation receipts increase, allowing governments to fund large infrastructural projects — a portion of this funding f lows down to landowners.

Farmers with large, successful businesses

Large, established farm businesses have borrowing capacity and the potential to generate surplus cash which can be reinvested into land.

Dairy farmers have been strong in the land market in 2018 after a very profitable 2017. We will see a lot more farms bought by large dairy farmers in the next decade.

Many have invested heavily in livestock and buildings since the removal of milk quotas as these loans are paid down — land is the obvious next investment.