ENGLISH ENTITLEMENTS – TRADING UPDATE 15.03.18
March is traditionally the month where farmers/landowners and their agents start to turn their minds to their BPS claims and to seriously assess what entitlements are needed in order to fully maximise their payment, and trade is now slowly beginning to pick up. With the online BPS claim forms now live on the RPA online website, it is expected that this will now build as we approach the 15th May deadline.
Trading has been steady but fairly slow for Non-SDA, and despite now building up a long register of purchasers who will wish to buy this season, only a few have as yet turned their interest into firm offers, with many prospective buyers hoping that the price will drop even further. The sales agreed in the early part of March were at £150-160 for VAT and non-VAT entitlements, but few were for large quantities. In the last week a few buyers have managed to secure some larger blocks at £130 plus VAT, however most sellers remain resistant to accepting such low offers with two months still to go before the deadline. With an estimated 2018 BPS payment of £228 per hectare, a purchase at £150 will result in an £80 return per hectare in the first year, and with the payment guaranteed in 2019, and the Government’s intention that it should continue for the life of this parliament and maybe beyond, entitlements bought now could possibly enable a subsidy (of some sort) to be claimed up to 2024.
However the market is driven by supply and demand and at present there is a good supply of Non-SDA entitlements, some of which will be lost to the National Reserve if they are not sold this year. It should be recognised, however, that if all the prospective buyers decided to buy all at once, there would not be enough supply to meet demand, and if this happens, this would put upwards pressure on the price.
We have a number of clients who would also be interested in leasing out, and are looking for offers at around 50% of the sale price, however as yet, no doubt due to the low sale price, there has been little interest in leasing in.
As usual the trade in SDA is much slower than Non-SDA, however the sales agreed have been achieving £200-220 per entitlement due to the shortage in supply. Currently we have one large block which is available at £210 plus VAT, together with some smaller blocks where the sellers are looking for £220 plus VAT. We also have about 30 ha available for lease at 50% of the sale price.
There is strong demand for Moorland entitlements, with the usual short supply. Sales have been agreed at between £55-65 per entitlement when they can be secured.