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.