Brussels moves to curb speculators’ land grab

French bid to halt EU trade deal with South American bloc P2-3 The West Cork farmer combining dairy and beekeeping New guidelines give Member States option of treating agricultural land as a ‘special asset’

THE EU has moved to combat the large-scale acquisition of farmland by investment funds.

In a new set of guidelines issued last week, the European Commission said farmland was a “special asset” and sales can be restricted to help limit price speculation and preserve local communities.

“The interest of foreign investors in farmland seems to be rising,” the Commission said last week.

“It appears that the global financial crisis, in particular, had effects on investment in farmland.”

EU rules generally prevent restrictions based on buyers’ nationality or residence. They don’t allow for limits on the type of buyer or conditions on the use of the land.

But the new guidance says countries can place limits on the amount of land involved, and give tenant farmers or neighbours first refusal in certain land sales.

“EU Member States have the right to restrict sales of farmland to preserve agricultural communities and promote sustainable agriculture,” said the Commission statement.

It is now up to Member States to decide if they wish to use the Commission guidelines to draw up new legislation to protect the farming sector.

The Commission move comes as concerns grow over land purchases by European banking giants in eastern and central EU countries. There are also reports about Chinese investment in French vineyards.

Concerns have also been raised here about the purchase by investment funds of large tracts of marginal land in the west for forestry.

The Irish Natura and Hill Farmers Association welcomed the EU guidelines.

Spokesperson Gerry Loftus said the organisation has in the past recommended the introduction of a 50km rule for any person or company availing of afforestation premium.

He added that in many communities, the replacement of people by forestry is a major concern.

“While we accept that local farmers should be allowed plant if that is their wish, these recommendations, if implemented in Ireland, would be a major benefit in helping to slow down the forestry expansion in counties such as Leitrim,” he told the Farming Independent.

STAMP DUTY EXEMPTIONS

Meanwhile, the Government is expected to announce amendments this week to the controversial Budget decision to increase Stamp Duty on farmland sales from 2 to 6pc in some cases.

Finance Minister Paschal Donohoe held talks with Agriculture Minister Michael Creed last Friday, and a series of exemptions for farmland is expected to be announced by officials on Thursday.

Under the original proposals announced on Budget day, the new 6pc rate of tax will not apply to inter-family sales if the seller is 67 years or younger.

Government sources confirmed that this threshold would be increased or even removed entirely.

One source said the move would only apply for a limited period, to encourage inter-family sales that were already under consideration to be completed.

Auctioneers warned this week that the Stamp Duty increase would drain money from the wider rural economy as well as hitting land sales.

Matthew Ryan of Matthew Ryan Auctioneers, Tipperary Town, said that the proposed stamp duty increase would hit farm contractors’ business.

“Many farmers buying land either borrow a little extra or have put aside a bit of money to make provision for works that may need to be done such as fencing, draining or re-seeding.

“Now they will postpone that work indefinitely or try to do it themselves so that is a loss to rural contractors such as plant operators, fencers and material suppliers.

“This is a hit on the broader rural economy,” said Mr Ryan.

Padraic Murtagh of James L Murtagh auctioneers told the Farming Independent that he saw the immediate impact of the change last Thursday when he auctioned 50ac of land near Delvin, Co Westmeath for €452,000.

“The stamp duty came to €27,000. Had that farm been sold on Monday or Tuesday the stamp duty would have come to a mere €9,000,” he said.

Deals

Roscommon auctioneer John Earley said he has customers who had made deals but felt unable to close unless there was a row-back on the new stamp duty rate.

“One man told me he had driven himself to the limit to buy a parcel of land but he simply hasn’t the extra now required by the new stamp duty rates.

“He told me that either the original price is dropped or the deal falls. I have been trying to encourage outraged customers to hold on until we see will some deal be worked out,” said Mr Earley.

“The government is completely out of touch. An increase of 1pc or 1.5pc would have been taken on the chin by farmers.

“And even if they had graded the increase in accordance with the sales price of the property, then there might have been some acceptance.

“They didn’t box clever on this.”