Ok I will have a go at explaining this.
The very top echelon of dairy farmers for the last number of years were making 1000 euro per cow of profit if you were to believe Teagasc et al. Stocked at a cow to the acre (which wouldn't be unreasonable on good ground), on say a 150 acre free draining well developed existing dairy farm, that is 150 cows so in theory, at that stocking rate and profit margin, then the farm has the potential to generate a profit of 150k in theory for someone who is looking to lease said farm before land rental charge is factored in. If the lease price is say 300 per acre plus the SFP of say 20k paid back to the owner then total land lease charge is 50k, all of which can be wrote off as a farm expense by whoever leases the land. So, on paper, that farm has the potential to deliver 100k of profit for whoever leases it. I did say on paper. If you were a young enthusiastic dairy farm manager with no farm of your own, would you go off and take a job managing someone else's farm at salary of 40k (as per most ads) or would you try to lease said farm and run your own show? I know what I would choose? If you are an existing dairy farmer with more than one son who wants to milk cows say then leasing a farm like this makes financial sense also and that might also avoid a row at home among sons. That is what is driving land rental charges to such levels on some of these farms. In other scenarios, naked land is making that kind of money if it allows a young person to apply to the National Reserve and establish entitlements etc.
The land rental market has never really made huge sense. But no one is ever forced to lease land. If farmers want to say a certain price for land then that is their own business. There is no point looking down on people paying huge prices for land and calling them fools for doing so. If they want to pay it, then let them. It is a landlord's dream of course, but they run the risk of getting a poor paying tenant etc.
Anyways, that is the best explanation I can put on it above. And by the way, I know the figures I have used above are paper figures and not really achievable for everyone but they are the figures used.