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At last week’s Winter Fair, a couple of farmers asked about the value of Basic Payment Scheme (BPS) entitlements in NI this year.
The issue goes back to deals done with landowners in 2015, when some farmers agreed to pass on a proportion (or all) of the value of entitlements claimed in future years on rented land, as part of a conacre agreement.
The first scenario explored in Table 1 relates to pre-2015, when landowners were allowed to claim an area-based payment worth €78.33/ha.
In 2015, when new rules around active farmers came into force, many landowners dropped out, with some passing this entitlement to the conacre tenant. Shown in Table 1 is the value of that entitlement in 2019. This year is the fifth step of seven to a flat rate payment by 2021.
First step
The first step in that seven-year transition happened in 2015, when this entitlement increased in value to £31.53/ac. It is now worth over £92/ac.
In the second scenario, an additional hectare was added, but no entitlement was traded, ahead of the 2015 claim. So rather than starting with an entitlement worth €78.33 in 2014, the starting point for this new entitlement in 2015 is zero.
Once the first step of seven is applied, this hectare of additional land generated the equivalent of £14.64/ac in 2015. But since then, the value has increased quite rapidly and by 2019 this additional hectare brought in the equivalent of just over £89/ac.
With DAERA confirming that entitlement values will now be frozen at 2019 levels (five steps of seven to a flat rate), it means that any further changes to values will solely be down to the exchange rate used to convert from euro to sterling.
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