I should point out that paying more the €2,500 per acre of reasonable farmland is simply madness.
I think the average rent is about €150 per acre per annum, how much profit can you make from an acre by farming it yourself. Perhaps some farmer pinsters could give some sort of indication.
Without the subsidies i think farming would be uneconomic.
I think the rent is irrelevant - agricultural land is currently in vogue with the wealthy as a way to store and protect wealth during turbulent times, in the same manner as gold. Of course, as part of a diversified strategy.
Not that I am any sort of expert, but I’m a farmer’s son, and there is shag all money in it, if it wasn’t for the subsidies most would go under.
The way I see it is, only a few ways to make money.
Have a large farm - couple of hundred acres, flat fertile ground, 500/1000 cattle for milk and/or beef, hire a few guys (or rope in the family) to help you out.
Most farmers I know make a living by working a normal job and doing the farming on the side.
Anyway, back to the point, farm land very much depends on the quality of it, so you’ll see large variations. I wouldn’t think it is an attractive investment, but they don’t make any more of it, so you’ll be ok long term.
What isn’t though? Gold is three times production cost and subject to vagaries of governments and mass sentiment; cash is compromised with the debt levels existing and its being fiat; shares are subject to market stability and growth. - When you have wealth measured in tens and hundreds of millions it can easily vaporise completely in times like now. You’ve got to put it somewhere where you can be at relative ease about it, and avoid putting all your eggs in one basket etc. Anyway, I’m only passing on what I’ve heard from the horses.
Farming is relatively uneconomic, only for the C.A.P. subsidies and suckler calf schemes and forestry grants, it would be completely uneconomical. The new de regulation (thinking) of the entire European subsidies to farmers to move into required markets for products not ‘butter mountains’ will change things. Banks threw too much money at farming in Ireland. Land in Ireland is way way Overpriced. Only Factory Farms will survive in the long term. Passed through France last week and the farms are massive. Bank reposessions are coming on stream, because of the depressed prices for milk from the Co Ops and beef is relatively cheap. Prices are slumping - butchers won’t pay, or will give you very little for weight.
Yes these people are selling into a depressed market. Thought farming would survive ‘this recession’.
True to an extent. But you have to balance that against how foreign holders of land might be treated in the event of regime change or need for additional tax revenues or receding of ‘free market’ ideology or social unrest even. This is not an inconsiderable risk if you are talking about fifteen years in a climate of likely economic woe. You might have less of this type of risk owning land in a country of which you are a citizen - that would make up for the decreased value for money. And don’t forget St. Bartholomew waiting in the wings with his gang of speculators ready to give you cash so they can use your land for wind turbines, biomass, forestry or whatever.
Epect that the EU will be accelerating the reductions in subsidies as part of overall austerity, reality is that IMO 80% of Irish farms are totally unsustainable without subsidies and the farmers dole. The current challenge in farming less than 80 acres is how to lose the least money so that the subsidy is not eaten up by operational losses. The cash reserves have been run dry on many farms over the past 3 or 4 years, the future looks worse, if subsidies are cut drastically it will be ugly.
E2,000 an acre is the max. economic value of decent agricultural land IMO, the cultural premium likely drives it to E3,500 or so, above that is pure folly.
There are many things to consider in terms of the valuations ascribed to lands (I have not read the article but it would have been a waste of time anway I believe based on general bluff passed about by auctioneers)
Wealthy people, and there are plenty of them in Ireland, will invest cash in land as a safe store.
Land like everything else in this easy credit fuelled bubble could be valued by how much you could borrow, independent of any viability of the productiveness of the land or other factors. i.e. if the bank will lend you the money then that is the price that the farm could make. Currently after doing some investigations it seems to me that land (i.e. good land in Kerry) can attain values reasonably based on those who can borrow borrowing for it of up to 8000 Euros per acre.
Land, being variable has different attractiveness depending on its location, aspect, fertility, drainage, existing buildings, any residences and Development Potential. These all add to the price or detract
I think the crazy prices still being paid for farm land is from farmers that got massive compensation from the gubberment when new roads went through existing farms and I can’t see banks lending money to justify this crazy expenditure.When this “windfall” cash runs out what exactly is going to prop up farm prices ?