CAP reform uncertainty hits entitlement trade

Uncertainty surrounding the future of the Single Payment Scheme is influencing buying behaviour in entitlement trading, agents report.

However, those holding off buying or selling entitlements ahead of an announcement about the new SPS should trade now, as a decision is unlikely to be made before the 2 April deadline this year, said surveyor George Paton from WebbPaton.

“I think people are hesitating because they think they should wait and all that does is put a lot of pressure on the system in the final weeks. There should be encouragement for them to come into the market, rather than hold off for something that’s not going to happen,” he said.

The company is currently trading non-SDA entitlements in England at £225/ha (plus VAT), SDA entitlements at £190/ha and non-VAT entitlements (usually coming from small non-VAT-registered farm businesses) at £260/ha. But prices were £10-15/ha less than in the same period last year, said Mr Paton.

In north Wales, Jones Peckover agent Sion Wyn Jones said there were more buyers in the market for low- and mid-value entitlements.

“Prices are pretty much on a par with last year, but I think the supply is less this year. There are more enquiries from buyers than last year, and I foresee that demand will outstrip supply up until the deadline,” he said.

The company’s last auction (17 January) saw slightly more than 210 units go up for sale, compared with the same period last year when more than 350 were put forward. Unit values ranged from £972/ha, sold by a dairy farmer, to £108/ha for lowland hill units.

He reported that some farmers were trading between entitlement value and types, which could be a reflection of the different perspectives about what was going to happen with Common Agricultural Policy reform.

In Cheshire, Tony Rimmer from land agency Rostons reported that non-SDA entitlements were trading at £240/ha, compared with £200-230/ha last year. SDA entitlements were trading slightly lower than last year at £190/ha, while quantity was similar to last year.

“At the moment we are seeing more demand than supply, which has firmed the price. We are certainly doing more deals at this time of the year and I think trade is driven by the returns that can be made by purchasing entitlements,” he said.

Sellers coming forward included those who had previously sold land but not the entitlements and those who had lost the land by way of tenancies coming to an end, he said.

Ashley Taylor from Townsend Chartered Surveyors said English non-SDA entitlements had been trading at about £220/ha, compared with £230/ha last year.

Non-VAT entitlements were trading at about £250/ha, but prices were likely to drop back due to a lot more coming on to the market, said Mr Taylor.

Buyers were being cautious due to uncertainty surrounding the future of the SPS, in addition to cashflow problems following the bad weather in 2012, he said.

“There’s certainly enough vendors on the market to meet the demand of the buyers, but the difficulty is getting firm offers, and many vendors are holding out for an announcement about the new entitlements scheme,” he added.

In Scotland, Alan Donald from Aberdeen and Northern Marts said trade at the company’s first entitlement sale of the year (11 January) had been fairly good, with more units put forward than expected.

The leading price on the day was £475/unit for a lot of 27 units with a value of €342.21 each.

Higher end entitlements were in greater demand, he said.


Gemma Mackenzie on G+