Wednesday 28 September 2016

Demand soars for EU payments on 'naked acres'

One-year entitlements selling for up to 80pc of face values

Martin Ryan and Darragh McCullough

Published 03/05/2016 | 02:30

Land owners are paying up to 80pc of entitlement face values for one-year leases
Land owners are paying up to 80pc of entitlement face values for one-year leases

Auctioneers are reporting a “flood of calls” from farmers looking to lease entitlements as deadline approaches for Basic Payment Scheme (BPS) applications.

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Land owners are paying up to 80pc of entitlement face values for one-year leases. It emerged demand is surpassing supply as the Department of Agriculture confirmed that average valuations had been revised upwards.

The new CAP system allows farmers to rent out spare subsidies, known as entitlements, without land attached for the first time this year. It also enables farmers with spare land or ‘naked acres’ to avail of additional income by renting entitlements, or those who are short land to rent out their spare units.

Entitlement payments will be €15/ha higher than previous Department estimates.

This will bring the average payment to €263/ha when greening is included.

The increase is due to a smaller land area being submitted in 2015 compared to 2013.

This is believed to stem from a higher exclusion rate of non-eligible land in recent years. In addition, farmers were reluctant to bank on rented land to activate entitlements.

Ballinasloe auctioneer Joseph Naughton said supply is very limited and his firm is “actively looking for entitlements to lease out” as they cannot meet demand.

“Farmers are paying up to 72pc of the value (including greening) for entitlements worth €500/unit. Most of the entitlements available are in the €200-€300/unit value and they are selling at 60-65pc,” he said.

Kells auctioneer John McGee described demand as “massive” with 70-80pc of the value being paid for one year leases on entitlements worth €400-€500. “Any entitlements available for leasing are flying — they

are gone as soon as we get them because the supply is not matching demand,” he said.

Cork-based Brady Group is leasing some entitlements for periods of up to four years with full payment upfront “which has a cashflow benefit” for those leasing, with the prices here peaking at 65pc of their value.

Agricultural consultant Owen O’Driscoll, who based in the Cork-Kerry region, is getting 50pc of face values for entitlements worth less than €100, 65pc at €200-€250 value, and 80pc for entitlements worth €400/ha.

Mr O’Driscoll said he expects supply to increase at the last minute when those who have lost land release their surplus entitlements.

ICMSA deputy president Pat McCormack said the higher payment per hectare will minimise the loss for those who are losing, while those who are gaining will receive a higher-than-expected payment.

“The Department should immediately inform all farmers what their payment rate is so that they can plan with certainty.”

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