Following strong trading up to the end of 2013, January has continued to see a lot of activity in the market. Non-SDA entitlement trade remained at £300 per hectare to mid-January following the announcement of the roll-over of English entitlements at the end of October. This however led to an oversupply of vendors, which subsequently resulted in a fall in the price, as supply is currently exceeding demand. The price has therefore now come back and vendors are now prepared to accept between £240 – £265, a level which is now tempting purchasers back to ‘the table’.
SDA entitlements continue to have a high demand with supply currently unable to match. Those looking to sell entitlements are in a strong position as they should be able to command high prices in the current market. As well as this strong demand, prices have been influenced by the announcement that in England the SDA payment rate will increase from 2015 to match the Non-SDA payment. It may be that vendors are waiting to find out exactly what payment can be expected in 2015, however with the demand so strong they would be wise to enter the market as soon as possible. Purchasers are currently in the market and ready to offer £250/ha, with the highest offers at £270/ha, more than the current Non-SDA trading rate.
Moorland entitlements are in a very similar position as the SDA with high demand and short supply. However unlike SDA, while it is expected, we do not yet know for certain whether there will be uplift in the payment, or to what extent. Initial DEFRA figures proposed over 80% increase in the payment, but this was quickly questioned and further consultation will be invited later in the year before a decision is made. This uncertainty is causing some hesitation in the market as vendors are unsure as to what is a suitable price. Purchasers are currently offering £50/ha with some deals being agreed at £55/ha.
As we move out of January and closer to the trading deadline on the 2nd April, our advice as always is to stay ahead of the game and do any trading that you require earlier rather than later. As well as removing the stress of last minute transfers, it also provides the security of ensuring that, should there be any issues with the transfer or a sale falls through, there is still time for the situation to be remedied or a replacement sale agreed.
We have received many enquiries about how the English Single Payment Scheme will be converted into the Basic Payment Scheme moving from 2014 into 2015. There has been a lot of concern that when the entitlements are rolled forward on the 31st December 2014, any excess entitlements held will not be rolled over. However this is not the case. The RPA will not be able to assess excess entitlements held until the payment claims are submitted, on whatever date that may be, probably in May again. This means that farmers will hopefully be able to sell their excess or purchase enough to cover their shortfall in the spring of 2015. We are consulting with DEFRA on measures to allow trading to continue between May and December 2014, however no confirmation has been given on the ability for entitlements to be transferred in this period. We have seen the uncertainty of how the transition will work with the withdrawal of the block on transferring ELS obligations with land sales, so we will have to wait for official confirmation to be produced before knowing for sure.
Further CAP news is expected with this year’s SPS handbook due out this month.