Land rental prices tend to be more aligned with the economic profitability of farming compared to the sales market, where prices for land sold regularly exceed levels that would be justified by the returns from farming. This is according to the Society of Chartered Surveyors Ireland / Teagasc Agricultural Land Market Review and Outlook Report 2022.
Their data shows that demand for rented ground remains strong with rents this year, and agents are expecting prices to rise by 10% nationally. Provincially, agents expect rents to rise by 12% in Leinster, and 9% in Munster and Connacht/Ulster.
The report indicates that because of the high demand for land and low turnover of land via market sales, the current leasing and letting markets are a “competitive” marketplace.
Last year, Leinster recorded the strongest rental growth figures, with prices for silage, grazing, potatoes, and other crops increasing by between 18% and 29%. Notably, land suitable for grazing, meadowing, and silage increased by 27% year-on-year.
The SCSI release also found that land suitable for potato crops increased by an average of 29%.
Munster rental values also saw an increase, albeit more muted than what was witnessed in Leinster, across land suitable for grazing, meadowing and silage, and cereal crops. Values appear to have risen by an average of 1-7% across these categories. In contrast, average rental values for potato crops saw a minor decrease of 1% on average throughout 2021.
Land suitable for sugar beet, maize, and beans in the ‘other crops’ category saw a 14% decrease over the year.
Land suitable for grazing, meadowing and silage, and land suitable for grazing only saw increases in rental values in Connacht in 2021. Values rose by 13% for land suitable for grazing, and by 10% for land suitable for grazing, meadowing and silage.
In contrast to the increase witnessed in the overall volume of land sold in 2021, an equal percentage of agents saw an increase in the volume of agricultural land leased as those who reported a decrease (29% respectively).
The report indicates that as more land parcels are tied up in longer-term leases, less will be available on the market.