FARMERS are paying too much for agricultural land and may face difficulties repaying loans in the future, a leading IFA official has warned.
The organisation's farm business committee chairman, Mr John Fitzsimons, said "I have been receiving reports of very high prices being paid for moderate parcels of agricultural land. Reports of land making £4,000 an acre and more are now commonplace throughout the country."
Mr Fitzsimons said higher land prices are being fuelled by two or three years of reasonably good farm incomes, and farmers are seeking to expand their holdings while interest rates are low. "The problem is that they will be borrowing over a seven to 10 year period and none of us can predict what will happen after the year 2000, which is not so far away," he said.
"We want to lay down a warning marker to farmers that they should carefully consider what return they will get from their acre and it will take them a very long time indeed to get a return of £4,000" he said. "We want to avoid the situation which occurred in the 1970s and 1980s, when there were serious debt problems created when interest and inflation rates rose dramatically."
Mr Fitzsimons said the increase in land prices appeared to be happening all over the Republic, not just in Leinster and Munster.
Teagasc, the agriculture and food development authority, has found that recent EU schemes like the Early Retirement Scheme, which involves increasing the size of a holding, have pushed up prices.
Last year farmers were warned by the Minister for Agriculture, Mr Yates, that they were paying too much for agricultural land. He advised farmers to take a more cautious attitude.
Changes in the budget to increase tax exemption on long term leases of land is one of the moves taken to attempt to bring more land into use and encourage farmers not using their land to let it to neighbours for rent.