Farm Ireland

Sunday 18 March 2018

Entitlements value boosted by extension of SFP regime

Darragh McCullough

Darragh McCullough

The value of single farm payment (SFP) entitlements has been boosted in the past week on the back of confirmation of the extension of the current SFP system.

Farm payments immediately felt a 10-20pc surge in value since it emerged that the SFP system looks set to remain relatively unchanged until 2014, according to auctioneers and brokers dealing in the trade.

"We're extremely busy at the moment," said Helen McGee of Meath-based HMG Agri-entitlements.

"We've got plenty of farmers who are short of land as a result of changes to reference areas, who are selling off entitlements. But we also have an increasing number of clients who need the money straight away. Usually their banks are putting pressure on them to sell their entitlements."

The latest announcements have effectively doubled the number of years -- from two to four -- that payments will be made under the existing system.

However, farmers had been factoring in some kind of a continuation of the system into the value they were prepared to pay for the entitlements, claimed Ms McGee.

"This will reduce the size of the increase in value of the payments somewhat," she said.

She expects entitlements that were trading at a multiplier of 1.6 for a €300/ha payment to increase to a multiple of two.

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"The higher the value of the entitlement, the higher the multiple," she said.

She also predicts entitlements of €700 to trade at a multiplier of three.

The trading window for this year's entitlements will close on May 15. A record number of entitlements were sold last year when the total value reached €6m.

Since entitlements first became tradable in 2006, nearly €23m of them have been bought and sold.

The average value of the entitlements traded last year was €289/ha.

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