Strong demand and limited supply has helped early trading of single farm payment entitlements get off to a firm start.
Traders report English Non-SDA “flat rate” entitlements selling for £220/ha to £230/ha, which is well above the £185/ha being paid at the start of the season last year, according to George Paton from WebbPaton.
“We’re about £45 over where we opened last year, although prices did get up to £275/ha in March and averaged about £250/ha for the year. The fact we’re about £20-30 down on last year’s average probably reflects the fact that there’s one year less to pay out from the entitlements.”
Most of the buying done so far had been from people purchasing farms, while tenant farmers tended to enter the entitlement trading market later in the autumn, he said.
Ashley Taylor of Townsend Chartered Surveyors said the fact that all entitlements were now “flat rate” had not affected trading, but the general feeling that the SFP would continue in some form beyond 2012 had helped keep demand strong.
“There could well be a swing in the market in October when, we are told, formal proposals of the CAP reform will be published. However the direction of this swing remains to be seen.”
In the absence of firm confirmation from Brussels, uncertainty remained over the extent of the introduction of additional compulsory “greening” and the capping of direct payments on the highest paid farmers, he added. He advised those with large blocks of entitlements to sell some now and some later in the season in order to mitigate any potential downturn.
Mr Taylor said the market for “naked acres” was strong, with many landowners looking to repeat the lettings they made last year, which at the peak of the market reached £60/acre, but fell to the season average of £50/acre towards 15 May.
However, some care was needed when letting naked acres to avoid possible “dual use” issues, he noted. “The EU has recently raised queries over the legitimacy of ‘dual use’, suggesting that two parties cannot claim for SFP and environmental stewardship respectively, on the same parcel of land, as is the case in Wales. Defra and the RPA think differently however, and are gathering evidence from about 1,000 farmers and tenants in the UK, showing that a landlord can have ‘management control’, while the land is at the disposal of the tenant.” firstname.lastname@example.org