Trade has been most brisk in Scotland, where farmers have long known their entitlement values. Wales and Northern Ireland have seen almost no business done, while England is just taking off.

Scottish values have stabilised around 2.1 times a standard entitlement’s annual support pay-out and about 1.2 times for the less popular set-aside entitlement’s annual income. However, these multipliers refer to 2005 values, and do not take account of modulation, financial discipline and inflation, which could halve SFP income by 2012.

English values are lower, according to Tony Rimmer of Carver Knowles, because of higher modulation levels, the phasing in of the less valuable regional area payment and because of political uncertainty after the Prime Minister’s keenness to further trim CAP spending.

Nonetheless, ordinary entitlements are realising as much as 1.9 times the value of their 2005 SFP. Set-aside entitlements, though, have so far been trading at a loss to the vendor, as intensive farmers pay up to 75/ha (30/ha) to get rid of them, despite the fact they have a face value of around 810/ha (328/acre) over the next eight years before cuts.

But entitlement expert Jonathan Smith at Bruton Knowles says England’s complex system is putting people off. “In Wales and Scotland, the higher the value of an entitlement, the better, while in England the high values will be a seeing a fairly rapid cut.

The market is just not liquid enough in England: People are nervous and don’t understand the more complicated system.”

Some leasing business is also being done around England, with several traders offering a sell and sell-back contract to allow entitlements to be “let” on an annual basis without land. This gets round the rules preventing lets without land, and typically fetches a price between 50% and 70% of the SFP income.

The low cost of this option could appeal to farmers with tight cash-flow, because they would not be buying a capital asset that takes two or three years to break even. In most cases, brokers say the “rent” for the entitlements and the rent for the land will usually be rolled into one price.

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