Trading of single farm payment entitlements is almost double that of a year ago with prices noticeably higher than last year, just two years before the system is set to end in 2012.
English flat rate or area-only entitlements are changing hands at around £185/ha while an entitlement worth €333/ha is currently worth £225/ha (£91/acre), said George Paton of broker Webb Paton. English SDA entitlements worth €236/ha were selling for around £200/ha and naked acres were attracting a rent of around £128/ha (£52/acre) from those who need to find land against which to claim, he said.
Several factors have combined to increase volume and demand, say traders. Some landholders are still catching up with the fact that they can make a claim. Linked to this is greater awareness of the two-year “use it or lose it” rule.
One in five of Webb Paton’s entitlement buyers had never claimed before, said Mr Paton. These tended to be smaller claimants looking for five, six or seven hectares at a time.
Secondly, there were those who have taken on land without entitlements, either following the end of an earlier tenancy or where the seller wanted to keep entitlements out of the sale. This has led to many brokers shifting more larger lots this year.
Coupled with this, some producers were trading up to enhance their payments, buying more valuable entitlements and trading in lower values. Others are speculating on the current subsidy mechanism being rolled on after 2013 or hoping that if the system is dismantled, there could be some form of compensation.
Currency is also a factor in the pricing of entitlements, which still provide a secure return at a level not available elsewhere, with area-only entitlements trading at £185/ha (£75/acre) and an estimated return (after modulation) of £613.50/ha (£248/acre) over the remaining three years of the scheme.
Demand for English Moorland SDA entitlements is up about 20% on last year, with most parcels trading in the range of £60 to £80 a unit, said Giles Lane of C & D Property Services, Carlisle.
“We’re finding homes for everything at the moment. Naked acres are in particularly short supply at £40-£50/acre depending on the value of the entitlements being set against that land. Most Scottish entitlements are trading at around 2-2.2 times their one-year value with the highest -alue entitlements trading at a higher multiplier.”
Things have also warmed up in the past 10 days at Jones Peckover, where Sion Wyn Jones trades mainly Welsh entitlements from the firm’s Menai Bridge office. “Prices are firmer and some people are wishing they had got in earlier, we have been doing a steady trade since last October,” said Mr Jones. Welsh entitlements with a face value of £140/ha (£57/acre) are selling for £220, face value of £295/ha (£119/acre) is making £580, while a £600/ha (£242/acre) entitlement is selling for around £1400.
Traders warn that last year, many buyers and sellers left it too close to the deadline for transactions to be successfully completed. This year, Webb Paton will only be accepting cheques until 19 March, then BACS transfers for the next few days and CHAPS transfers until seven days before the final business day of Thursday 1 April.
The deadline for submitting RLE1 entitlement trading forms to the Rural Payments Agency is now midnight on 4 April (usually 2 April). However, Friday 2 April is Good Friday and 4 April Easter Monday.
Forms can be posted or dropped in to any of RPA’s Drop-In Centre post boxes up to midnight on 4 April 2010, see list of centres and opening times at www.rpa.gov.uk/sps/offices.