2019 UK Entitlement Trading Update – Non-SDA/SDA/SDA Moorland/Scotland/Wales/Northern Ireland

1. Non-SDA

The 2018 market kicked off on the 16th September 2017 at £150 plus VAT for English Non-SDA, and this year the first sale was agreed on the 26^th September at the same level. Market confidence has increased however after publication of the Agriculture Bill on the 12^th September and further sales have now been agreed at £160 plus VAT. Currently we only have availability at £165/ha plus VAT. The market had thought in 2017/18 that the Basic Payment Scheme (BPS) might end in 2019, so entitlements bought in that scheme year for 2018 were only expected to be claimed upon twice (2018 & 2019). The Agriculture Bill however made clear the Government’s intention was that payments in 2020 would also be made in the same way (more or less) as 2019, so as with the 2018 scheme year, entitlements bought in 2019 will also be able to be claimed upon twice (2019 & 2020).

We are finding that, unusually for this time of year, we have more buyers registered with us than sellers (usually the sellers outnumber the buyers until the New Year), and it appears there is a definite “mood shift” following the release of the draft Agriculture Bill in September, and the second reading on the 10^th October.

As well as indicating two more years of payments at the current level, the Bill is further suggesting a 7-year transition period from 2021 to 2028 during which there will be further reducing Direct Payments based on claims made in a “reference year” which is yet to be announced. There is also the suggestion the payments could be “delinked” and paid as a lump sum to help with diversification or retirement planning, to prepare the landowner/farmers for a time without Direct Payments.

All of these factors lead us to believe there may well be a shortage of entitlements in the 2019 scheme year, as farmers may delay retiring until after 2020 (to qualify for any delinked lump sum payment), and others will be advised to maximise their claims in the years leading up to 2021 in case one of these years is chosen as the “reference year” for any future payments. If the Government made a firm announcement that 2019 could be a reference year, then it would not be unreasonable to expect the price to rise to persuade sellers to sell at all. Or we could even see the resurgence of naked acre letting, if there is strong demand from farmers who have sold/developed land parcels but who want to keep claiming on their entitlements to maximise their claims. This would further reduce the “pot” of entitlements available to buy for 2019.

2. SDA

The first sale has recently been agreed for SDA entitlements at £200 + VAT, and demand is already strong. Traditionally demand outstrips supply for SDA, which is why buyers are prepared to offer more than the Non-SDA market, despite the fact that SDA entitlements pay out slightly less. The Agriculture Bill however hints that payments to “upland” farmers could be increased from 2021, so it is possible that there could be even more interest than usual in maximising claims on SDA land. Therefore those wishing to buy would be wise to start looking sooner rather than later. In 2018 SDA entitlements peaked at £220/ha, after a start at £175/ha, and had an average price over the trading period of £192/ha. (See 2018 Entitlement Trading Market Report for more detail).

3. SDA Moorland

It is very likely that there will be an even stronger demand for Moorland entitlements this year than usual, due to the intriguing reference to upland farming in the House of Commons Briefing Note on the draft Agriculture Bill as follows:

Environment Secretary, Michael Gove has suggested that the particular challenges of upland farming and […………] may be acknowledged more in future allocations (Page 19, Commons Library Briefing No. CBP 8405, The Agriculture Bill, 9 Oct 2018)

The first sales of Moorland entitlements for the 2018 scheme year were agreed in January at £65/ha (in effect, face value), and the average price over the trading period remained at this level, with the lowest price being £45/ha for one large lot but otherwise being £55/ha, with the highest price at £75/ha. It is expected that this year’s trading will see similar prices, if not higher, depending on supply.

If you would like to discuss your entitlement situation, please contact Julia Clark.

ENTITLEMENT TRADING INFORMATION & RESOURCES

If you are new to, or would like further information on, the entitlement and BPS market please see our UK BPS Entitlements User Guide here where you can also see how to order a free ecopy of our book or the £25 paperback version.

You will find our most recent entitlement trading updates by clicking here and our 2018 UK entitlement trading market report here.

Please use these links to find what is available and wanted, however for the most up-to-date prices and offers do contact us.

If you sell entitlements through us, you will need to authorise us on the appropriate Rural Payments online system.  This is a simple process, details of which can be found here for the RPA and you can also find our English seller’s guide here, which will explain the process of selling your English entitlements. For more information on the other regions please contact Julia Clark.

If you are buying entitlements through us, the process is explained in our buyer’s guide, which can be found here. Please ensure first you have taken advice as to whether you qualify for the New Entrants or Young Farmers scheme.

Other services we offer, including formal valuations, which may interest you include: