One of the arable farmers the recent Farmers Weekly Study Tour of Ireland visited had bought 100 acres about three years ago. It was good land and close to home, unlike some he rented that was up to 60 miles away. OK, by taking on the management of land so far from the home base he had increased the size of his operation considerably to well above 1000acres. But the opportunity to buy this relatively small parcel on his doorstep seemed to him and his family too good to miss.
At the time the Irish economy was booming, arable commodity prices were rising, and demand for land in the locality was high because a new motorway had sliced many farms in two and the government had paid out generous compensation to affected farmers. Very little land changes hands in Ireland. Demand was strong and he had had to pay Euro27,000, or over £24,000/acre at current exchange rates to secure the land because of this combination of circumstances.
Today, he admitted, that land would be unlikely to make Euro10,000/acre and if it were not for the low interest rates on the money borrowed to fund the purchase he would be unable to service the loan.
That kind of extreme volatility is the result of the credit crunch and its ramifications in Ireland where there have been four budgets this year, so far, and the economy is in almost as serious a melt-down as that in Iceland, together with the sharp fall in soft commodity prices world wide.
The family were among the best arable farmers in Ireland. Their crops were immaculately managed and looked like yielding bumper crops. But at the end of the day the value of those crops was similar, or a bit less, than what we get in England and the FW party wondered whether such investments could possibly stand up to the pressures that will surely occur over coming years.