In this opinion piece, Tadgh Quill-Manley in the first of a two-part series, shares his thoughts on Ireland’s land market.
In April 2023, it was reported that a survey conducted by auctioneers predicts that the average price of agricultural land in Ireland will increase by 8% this year.
According to agri-auctioneers and valuers from the Society of Chartered Surveyors of Ireland (SCSI), countrywide rental costs will increase by an average of 14%.
The data can be found in the SCSI/Teagasc Agricultural Land Market Review and Outlook Report 2023, which examines how the industry has performed over the past year and forecasts its future performance for the duration of 2023.
More difficult to purchase land
As is well documented, it is becoming more and more difficult for potential farmers to purchase agricultural land, as they can often not obtain access to a sufficient amount of credit in order to purchase it.
This is not helped by the fact that a January 2023 report in the farming media confirmed in national circulation a long-held, rather uncomfortable suspicion – that agricultural land is being bought in bulk by international investment funds.
As we remember, Coillte’s alliance with UK-based institutional investors sparked outrage among farmers, and not without reason.
This was not the first occasion in recent years that a single organisation sought to acquire huge tracts of Irish property.
In 2017, the National Treasury Management Agency’s Strategic Investment Fund made a joint investment with the European Investment Bank in a Finnish forest investment fund.
Until recently, agriculture was the dominating participant in the land market. What has altered?
The development of alternative criteria for agricultural subsidies, along with increased environmental ambition on the part of institutional investors, has resulted in significant investment firms trying to acquire forests in Ireland.
The decoupling of payments from cattle output and the establishment of area-based payments have been important contributors to the shift.
Moving away from Keynesian, production-based subsidies, which were responsible for rebuilding much of the otherwise destroyed Western economy in the aftermath of WWII, has allowed institutional investors to claim both CAP area-based payments and, furthermore, without the need to feed or care for stock, there is no longer a comparable imperative to reside in a rural area in which that land originates, if these payments can be claimed with minimal effort by the new owner.
Rural Ireland is now being consumed by what the economist Brett Christophers describes as “rentier capitalism,” and what Nobel prize-winning economist Paul Krugman has defined as the “rentier regime”.
To comprehend rentier capitalism, one must first comprehend rent.
Rent is money created by exclusive ownership or control of a finite asset of some type.
The person or, more usually, a business that owns the asset is known as a rentier.
Rentier capitalism is an economic structure arranged around income-generating assets in which rents govern total revenues and rentiers dominate economic activity.
It is inherently oriented on ‘having’ rather than ‘doing’ and is founded on a proprietorial rather than entrepreneurial attitude.
That is basically how Ireland has been in recent years. Additionally, Ireland is not the first country in which this had occurred, but the governors of European finance are perfectly content in following the example that has ravaged family farming in the USA for several decades now.
Millions of acres of agricultural land in rural America have fallen under the ownership and control of different financial organisations in recent decades, resulting in a significant change in land ownership.
It has been proposed in the ‘Rural Sociology’ journal that a political-economic structure to guide understanding and analysing the importance of the increase in institutional investments in rural areas in necessary.
Using timberland and farmland as examples, it has been argued that we are seeing an unparalleled merger of financial capital and landownership that harkens back to prior ages of rentier control and that the growing trend to approach land as merely a financial asset—which is called the ‘financialisation of landownership’—gives rise to a series of inconsistencies that might have far-reaching consequences for rural communities throughout the United States, and, indeed, the world.
Finally, by we observe the emergence of a land bubble and the role of institutional landowners in driving up land prices in the agricultural sector.