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 beginning to pick up. With the online BPS claim forms now live on the RPA online website, it is expected that this will 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 and still are looking for £140-£150 per hectare. 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.
RPA ENGLISH ENTITLEMENTS – COMPUTER “GLITCHES” 2018
Every year the RPA computer throws up some new glitch that can affect the transferring of entitlements. This year we have so far come across three different types, as follows:
1.Entitlements being removed from a farmer’s records in error when not claimed for only one year
We have already had two instances of this happening this year, where the entitlement history is correct on the online records, apart from the entitlements are removed by the computer in error when not claimed upon in 2017. As the rules make clear, farmers only have to claim on all their entitlements once every two years, and therefore someone who the computer shows did claim and was paid in full on all their entitlements in 2016 should have those entitlements available in 2018. When this was queried with our contacts in the RPA we were informed: “…unfortunately we have experienced a system anomaly causing surrenders to generate incorrectly in the first year of non-use, several claims have been affected by this scenario.” When this has been brought to their attention, the RPA has been able to correct these errors, but farmers who did not claim last year who are considering selling this year would be wise to double check their entitlements are showing as available for 2018 now, in case they need to contact the RPA and get any errors corrected, so the entitlements can be transferred online by the deadline.
2. Entitlement records not being updated when 2016 payment was made, therefore they are not showing as available for 2018
We have a case where a claimant was paid in full in 2016 (and this has also been confirmed in writing by the RPA), however for some reason the RPA computer has not updated their records to show the entitlements were activated in 2016, and therefore all their entitlements still show a use by date of 2017 rather than the correct 2018. This particular claimant is also still waiting for their 2017 BPS claim to be paid (again, no reason has been offered for the delay in processing by the RPA, they are simply “at the back of the queue”). We have been advised by the RPA that until the 2017 claim is processed and the payment is made, the computer cannot “refresh” their entitlement history to correctly show the use by date of 2018 it should be showing now, or the 2019 use by date that will be correct after the 2017 claim is processed. Where claimants have not yet been paid for 2017, although the RPA computer will not transfer the entitlements until they are, it should at least display the use by date of 2018 This enables the transfer application to be submitted, even if it does then go into “pending” subject to the processing of the 2017 claim. The RPA have advised they have no idea why this particular glitch has arisen, and they are unable to do anything other than reassure us that this will be resolved once the 2017 payment has been made, and to recommend that a paper RLE1 transfer form is submitted in the meantime. This of course is not ideal, as RLE1 forms will only be processed long after the deadline.
3. Transfers in “pending” not automatically pushing through
We had been advised by the RPA that entitlement transfers that were ”pending” would automatically push through once the “block” holding them up is removed, i.e. if a seller’s 2017 BPS claim is finally made, or if a buyer made their online “active farmer” declaration after the transfer application was submitted. However our experience has been that you have to contact the RPA and request that these transfers are manually “pushed through”.