Land supply to tighten in Covid uncertainty
PRICE increases for farm produce and land are being influenced by Covid-19, a new report suggests.
It predicts the supply of land will tighten this year, with fewer holdings expected to come to market. It also suggests farmers will face challenges securing finance despite land often being seen as a resilient investment in markets lacking confidence.
The research, by the Institute of Professional Auctioneers and Valuers (IPAV), highlights opportunities brought about by the pandemic.
Chief executive Pat Davitt said land prices held up last year and he expects this trend to continue amid low supply.
He also suggested young people leaving urban areas while working from home will benefit rural communities this year.
“The Covid-19 pandemic has had the disruptive effect of more workers seeing living and working in rural Ireland as a realistic and achievable ambition,” Mr Davitt said.
“We’ve seen the return home of many of our exiles, and while they cannot survive on farm income alone, the opportunities for off-farm income have greatly increased arising from the acceleration in working from home.
“This will help the viability of small farms and help to keep the tradition of the small farmer alive.
“Auctioneers are also seeing an increase in demand for rural properties from those living in the cities. The recent government announcement that it intends legislating to give people the right to ask their employers to work from home beyond the end of the pandemic is to be welcomed.
“The bottom line is demand for land remains strong; however, the amount of agricultural land sold each year is small and has been falling.”
The report says a lack of supply will continue to sustain land values, with “no evidence this phenomenon is likely to change”.
It suggests supply will tighten further this year, despite farmers embracing the use of technology to sell land.
It also highlights how the coronavirus has influenced consumer patterns and impacted prices for produce.
The report’s author, Philip Farrell, the chief commercial officer of property technology firm Offr, said lamb and chicken prices held up well last year despite Brexit.
People cooking more while restaurants were shut was also feeding strong prices for farm produce, he added.
Mr Farrell believes Brexit will bring logistical challenges and significant opportunities for the sector, with Irish produce expected to perform well compared with cheaper “inferior” UK imported goods.
“Lamb prices have started the year on a very positive note as a result of Brexit.
France is now looking for alternative EU-based suppliers and Ireland is an obvious option,” he said.
“As the new, less profitable trading relationship with the UK becomes embedded, some sectors will prove to be more vulnerable.
While the Brexit deal ensures no tariffs in the short to medium term, customs, additional transport costs and supply issues will create challenges and affect profitability.
“The business of valuing, marketing and selling non-residential agricultural holdings can continue as normal, unlike the residential property sector.
“Sentiment and confidence, however, may be affected, thus reducing the number of land holdings coming to market in 2021.”