The value of Irish farmland is heading for €60,000 per hectare (€24,281 per acre), the highest in Europe.
|Wealthy buyers of land can get Common Agricultural Policy payments for merely watching the grass grow. |
That's 10 times the value of land in Scotland and six times that of similar farmland in England.
According to estate agents Savills Hamilton Osborne King, prices will rise further in 2007, having increased by 40% on average in 2006.
"Supply of farmland coming onto the market is a mere 8,000 hectares per annum out of a total land-bank of more than four million hectares," says Derek Brawn, Savills's Head of Research. "That's just 0.18% turnover and means that on average each field changes hand once every 550 years."
Brawn says that the typical return from farming in Ireland is around €150 per acre and this figure has not changed much over the last 15 years.
"Serious farmers who want to engage in farming on a commercial basis and earn a decent living are looking at buying farms abroad. This will be an increasing trend over the next two-three years and Savills Hamilton Osborne King and their parent in Britain are strategically placed to facilitate this."
Savills said the link between farm incomes and land values is well and truly broken. It is no longer possible to buy an Irish farm on a commercial basis, by paying €25,000 to €35,000 per acre, and then being able to make a living from it.
The estate agents say that lifestyle farmers and hobby farmers are mainly to blame for pushing up the value of land. It said the former, predominantly "high-net-worth" individuals, accounted for 60% of farm purchases last year.
As Irish wealth has increased alongside global wealth, many prominent business people can easily afford to splash out €3m to €5m on a farm, about half what they spend on their "Des-Res" in Dublin 4.
Savills also said that existing farmers who have had the farm in the family for generations, although often reluctant to sell it due to emotional ties, are being forced to take off-farm employment whilst still living on the farm and renting out part of it. In effect, they have become "hobby" farmers.
The Common Agricultural Policy (CAP), which is in effect a public welfare programme, not only provides farmers with more than two-thirds of their incomes but the biggest farmers get the most.
In Ireland, beef baron Larry Goodman receives more than €500,000 annually in direct payments in respect of a 1,600 estate and the criteria are so general, that he can be effectively paid for watching the grass grow.
In the UK, Queen Elizabeth is one of the top CAP beneficiaries.
Ireland and France had opposed upper limits on the direct payments system that replaced the product subsidy system, which means that wealthy individuals who buy land to retain on a non-commercial basis, can claim public welfare.