Mary Coughlan (Donegal South West, Fianna Fail)

Low levels of land mobility have been a long-term feature of Irish farming. The substantial increase in land prices in recent years and the relatively small acreage that is placed on the market annually demonstrate that this situation has not changed. Agricultural land prices have increased by almost 300% from €4,967 per hectare in 1993 to €14,379 per hectare in 2003, the latest figure available. In addition, both the volume of land available for purchase and the average parcel of land sold has decreased significantly. The increase in price reflects a combination of a shortage of land on the market and increasing levels of demand from both agricultural and non-agricultural purchasers. According to the Central Statistics Office, in recent years less than 0.2% of agricultural land has been placed on the open market for sale. The means by which land has changed ownership is through gift or inheritance within families.

Irish farmers have responded to this by altering their behaviour. Rather than buying, they are now leasing the land they need to expand. The high cost of purchasing land has encouraged many farmers who wish to expand their enterprises or enter agriculture to opt for leased land. Almost one fifth of all agricultural land is leased, with one third of Irish farms leasing in some portion of land. For meaningful farm planning, leasing is best done on a long-term basis. The Government has a number of incentives in place to encourage this and to improve the overall levels of land mobility. To this end, my Department operates an early retirement pension for retiring farmers who dispose of land either by sale, transfer or long-term lease.

There are generous income tax disregards for farmers who lease out land on a long-term basis. Lessors aged over 40 years of age can currently avail of annual exemption thresholds of up to €7,500 for leases of five to seven years and up to €10,000 for leases of seven years or more. This has undoubtedly encouraged the better utilisation of land and facilitates better long-term planning by farmers who wish to increase their scale of production at a reasonable cost without having to purchase. There is also a series of measures in place to help reduce start-up costs for new entrants. These include a number of generous grants and tax reliefs. For young, suitably trained farmers there are a number of attractive schemes, including an installation aid grant of €9,520, 100% stamp duty relief on land, a 90% relief from capital acquisition tax and 100% stock relief for four years for eligible farmers.

These are pragmatic solutions to allow those farmers who wish to do so to expand production. Anecdotal evidence points to further increases in land prices in recent times caused by the implementation of the Luxembourg Agreement and the financial platform to be provided by the single farm payment. The Government will continue to review its measures to improve land mobility and is always conscious of the need to encourage production farmers to be able to expand.

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