Have been trying to get a handle on just how crazy agricultural land prices got in the heady Tiger days and this is one of the better reports coming from the Farmers Journal in January 2007. Thought I would share it.
IMO, ERO 4,000/acre is reasonable for average land, i.e. land suitable for grazing and hay/silage. That would be based on 20 year revenue generation potential at EURO 200 per acre without subsidies, etc. I am interested to hear if anyone else has studied this or can comment on agricultural land values projections.
whatever about house prices agri prices make no sense whatsoever. The mother was telling me a farm of 50 acres with some farm buildings and a house made over €1m. Granted i have no breakdown of the value of the house but it wasnt a mansion by any means but 20k an acre for good farmaland in west limerick seems to be the going rate
GB, many thanks, I think that sums it up nicely. Their figure for return from 1 acre is EURO 150 for farming activities, it will be interesting to see how prices adjust to the new reality. With reduced global demand and a strong EURO vs. Sterling, downward pressure is here and now for agricultural produce and I fear the worst for that industry. There are so many spanking new tractors out there bought with borrowed money it is not funny.
Almost identical farm sale reported in my local paper here in Westmeath this week, house was an old cottage only good for knocking (site value) + 50 acres in a few divisions which made just over the €mill, not great land by any means either and 5 miles out of town so no “hope value”.
I believe that 2000 euro /acre would be right - putting us in a comparable position to the UK and Europe. Don’t forget that even if an acre returns 150-200 euro, you do need to put in quite a bit of work to get that.
Assuming of course that you are not including for the “lottery ticket” premium that Irish farmland has.
Per the attached report from Teagasc, in 2006 the “profit” per hectare for drystock farming was in the region of E600 per hectare or approx. E400 per acre, this is in all cases almost 100% from premium income and income from the faring activity is virtually zero.
As I understand it, premia have been reduced by 10% since 2006 and fixed costs had increased significnatly at least up to this year, most of all I believe that produce prices are declining versus increases annually from 2003 up to 2007.
I am aware of a farm of land in excess of 100 acres in Co. Kildare on sale for a year or so, asking €30k p.a. offered €20k but
purchaser (professional saleried) who had more than 50% on deposit failed to Bank the deal. Offer on table now is below €10k p.a.
It obviously varies by state and length of growing season but a rough guide is
Arable: $3,000 - $4,000 per acre
Grassland: $2,000 - $3,000 per acre
Woodland: $500 -$1,500 per acre depending on how valuable the timber is.