'Crazy' entitlements' bidding creating farm property bubble
Frenzied bidding that is driving up the price of Single Farm Payment entitlements to four times their value has led to calls for regulation and controls in the sector.
With the deadline for trading looming this Thursday, demand in some parts of the country has outstripped supply by a factor of 50:1 in a market auctioneers have described as "crazy".
The hike in trading activity has also revealed huge anomalies in entitlement values around the country.
Michael Guiry, of Farm Entitlements in Waterford, traded 8.5 entitlements from Leitrim that had a face value of a whopping €4,740.29/ha. These were sold in two lots to buyers from Clare and Tipperary for four times their value, or €19,000/ha.
Mr Guiry has sold in excess of 4,000 units this year, a 60pc rise on 2013.
"The website crashed several times in recent days because of the volume of traffic. The demand has been huge – we have nothing left," he said.
The vast bulk of entitlements worth more than €300/ha are trading at 2.3 to 2.5 times value. Lower values are being sold at back to double their face value.
John McGee, HMG Agri Entitlements, Kells, described the market as "mayhem" since last January.
"Last week all supplies of entitlements for sale dried up. Overall sales are slightly higher than last year. Entitlements worth €300-€400/ha are generally making 2.5 times their value. We have some people without land for 2014 buying them and a lot of younger farmers who are really doing their figures on forward planning," he said.
A spokesperson for Brennan Agri Services, New Ross, also said throughput is up on last year. "Everything we had is gone – we can't get enough. We had some units worth €1,000/ha that sold for over three times their value."
Auctioneer Liam Mullins, from Mallow, said that he was trying to get rid of entitlements four months ago. "Now there is a queue waiting. We have 50 buyers for every entitlement – it's a crazy situation. My sales are up 100pc on last year. They are generally making up to 2.6 times their face value."
But perhaps more worrying for prospective farmer buyers is the emergence of non-farming purchasers. "I had one client with no land who paid €25,000 for entitlements," added Mr Mullins.
ICMSA President, John Comer, described the "speculative" market for entitlements as a new property bubble that would disadvantage farmers.
"It totally distorts the legitimate leasing of land that dairy farmers are depending on for expansion of production," he said.
"The new rules governing entitlements had inadvertently thrown up a situation where individuals sitting in comfortable Dublin suburbs could be dabbling in the buying and selling of entitlements in the manner they had once reserved for property. There's a glaring need for regulation of this trade. The Minister needs to get to grips with it immediately," Mr Comer said.