Friday, April 25, 2008

European land prices hit record on food price boom; Irish land 10 times value of land in Scotland ; Six times that of similar farmland in England

Just a week after thousands of Irish farmers protested in Dublin, during the visit of European Commission President José Manuel Barroso, against the perceived threat to the welfare system known as the Common Agricultural Policy (CAP), posed by the current round of global trade talks, the Financial Times reports that with prices of commercial and residential property falling, investors are increasingly turning to a more traditional asset: farmland. Long seen as a declining industry, farming has received a fillip in the last few months as global demand for food has increased. As a result, the cost of agricultural holdings across the European Union has risen to record levels.

I had observed last week that the Irish Farmers' Association (IFA) is good with the poor-mouth and the little perks such as the land rezoning system that makes multimillionires of farmers who sell land for development and the roadbuilding deal that has resulted in land cost as a proportion of total project cost, to be double the European average, is conveniently ignored.

Irish farmers on strike to maintain welfare and trade protections as global agriculture booms

It was reported in May 2007 that the value of Irish farmland is heading for €60,000 per hectare (€24,281 per acre), the highest in Europe. 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.

Irish farmland prices set to be highest in Europe with emergence of lifestyle farmers supported by EU's CAP welfare system

Irish farmers have been the main foreign buyers of UK land in recent times and rich farmers are the biggest beneficiaries of the the CAP and have most to lose. Beef baron Larry Goodman gets a payment of more than €10,000 each week that helps to defray expenses at at 1,600 acre estate even though he needn't have any output from it.

UK land prices jumped 25% in 2007; Irish dominant among foreign buyers; Average land cost in Ireland almost four-times higher than in Britain and the highest in Europe

The FT reports that Andrew Shirley, head of rural research at Knight Frank, said land prices were rising across Europe.

“It is not only UK land values that are increasing sharply, the global commodities boom means investment funds are looking further afield for cheap land and this is helping to drive prices up, particularly in eastern Europe and the former Soviet bloc where there are vast tracts of underutilised and potentially very productive land,” he said.

In Lithuania a hectare of agricultural land cost €734 ($1,167, £589) in 2006 compared with €164,340 in Luxembourg, the most expensive country.

In Poland the US embassy reports that average prices rose 60 per cent between 2003 and 2006.

In neighbouring Ukraine – not an EU member – prices for the best land are forecast to double from $3,500 per hectare this year as investment funds pile in, Shirley said.

Even Serbia, another non-EU country, has seen a steep increase. Real estate analysts estimate arable land prices this year in Serbia’s agriculturally rich northern region, Vojvodina, at roughly €7,000-€8,000 per hectare this year, up sharply from €5,000 last year.

Countries with sales restrictions, such as France, are cheapest. Land is about €6,000 a hectare there because it must be offered first to young local farmers. However, land prices are still 50% up on 2003.

Saturday, April 12, 2008

Ireland - A One Party State Propped up by "Dependents"?

Ireland has a modern economy run by the icons of American business from high tech, big pharma and finance. In parallel, is a political system that was developed in the era of the donkey and cart and has not undergone any significant change in the interval.

Ireland has 35 ministers and 23 parliamentary committees but the buck stops nowhere in the system.

In recent decades, as the dominant political party Fianna Fáil has been unable to get a working majority in the Dáil, it has relied on so-called "Independents" and small parties such as the Progressive Democrats and the Green Party.

The one-issue or no-issue Independents sell their touted independence for the security of a hoped for long parliamentary term coupled with pork-barrel patronage for their constituents.

As the American comedian said: Those are my principles, and if you don’t like them…. well, I have others.

It's simply a joke that the likes of Finian McGrath who represents a constituency in North Dublin, calls himself an "independent" when his deal with Fianna Fáil is principally to ensure that he will not have to face another election before 2012.

The Labour Party had significant influence in coalition governments but today, the small parties operate in the manner of the "dependents."

The small Green Party has its environment agenda and any significant moves on climate change will not be led by Ireland. The EU will mandate required change and even on the issue of a carbon tax, a commission is to report on the issue. Beyond, its narrow agenda, in the compartmentalized system of government, they have simply no influence.

The unravelling of the Progressive Democrats began in 1997 when it entangled itself in soundbites on reform of the public service.

It proposed cutting public service jobs by 25,000 and presided over a growth of 90,000 but as it lost half its seats in the 1997 general election, it also lost the appetite for reform.

It simply became a cheerleader for tax cuts provided by the funds reaped from a raging housing boom.

The Progressive Democrats await the respirator to be unplugged and it is evident that the party had much more impact in Opposition than in government.

After 11 years in office without power, where are the footprints?

So all Fianna Fáil has to do, is to copperfasten its hold on power by buying off "dependents" and small one issue parties like the Greens.

The result is bad for democracy and as the incoming Taoiseach Brian Cowen contemplates his choices for 35 ministerial positions, largely from a group of second-raters, it says a lot that former schoolteacher Micheál Martin, T.D., currently Minister for Enterprise, Trade and Employment, is being touted as a choice for the Department of Finance.

In Martin's current job, his main task is to make job announcements for American firms. In these dangerous times for the Irish economy, the Corkman's repertoire of superlatives for the most mundane, is hardly what is needed.