Entitlements sales spike ahead of BPS closing date

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Declan O'Brien

Declan O'Brien

A major spike in entitlement trading has been reported in the run-up to tomorrow's application deadline for CAP area-based schemes such as the BPS, ANC and GLAS.

Auctioneers and agricultural consultants maintain that there has been a 25pc lift in the volume of entitlements leased and purchased this year compared to 2018, with a noticeable increase in the sale of entitlements.

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Demand for entitlements to lease and purchase by far outstrips supply, with sale prices varying from 2.3 to 2.7 times the value of the entitlement.

The higher the value of the entitlement, the bigger the differential purchasers are willing to pay, explained Skibbereen-based agricultural consultant, Owen O'Driscoll.

While Mr O'Driscoll pointed out that sales of entitlements accounted for just 10pc of the overall trade, he said there was a definite increase in the level of sales this year.

He attributed the lift in entitlement sales to the impact of convergence, and to fears that entitlement holders would be forced to "use them or lose them" under the new CAP.

Mr O'Driscoll said farmers were willing to accept the 20pc clawback levied on entitlement sales in order to offload them.

Blarney auctioneer Dan Fleming, agreed, saying there was a noticeable lift in the number of entitlement sales. He said suggestions that 2019 could be used as a reference year for future schemes had driven demand from farmers.

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Mr Fleming said prices varied according to the value of the entitlements. Those over €400/ha made 2.6 or 2.7 times their value, while 2.3 to 2.5 times the value was paid for those worth €200-350/ha.

Mr O'Driscoll said a similar range in returns was evident in the entitlement leasing market.

He said entitlements valued at €150/ha or lower were generally trading for a 50:50 divide.

That means that both the owner of the entitlements and the person leasing them shared the value: in the case of entitlements worth €150/ha, both parties took €75/ha.

In contrast, 70:30 divides were agreed for high-value entitlements, with the owner retaining 70pc of the entitlements' value, and the leasee taking 30pc.

Splits of 60:40 and 65:35 were also reported for entitlements valued at €200/ha to €350/ha.

Both Mr O'Driscoll and Mr Fleming said there was a mix of customers for the entitlements, and for land in some instances.

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