Discussions with auctioneers specialising in the trade of entitlements and agri-consultants, show entitlement sales to-date running broadly in line with the higher levels witnessed in 2023. A number of agents are commenting that there are still a lot of owners with surplus entitlements in two minds whether to sell such entitlements or continue to lease them.

Prices reported for sales range anywhere from two times their value to 2.6 times their value, with a high percentage falling within a range of 2.2 times their value to 2.5 times. There is significant variation in sales values reported.

Some agents are reporting higher multiplier for higher-value entitlements, while others report that the high-value entitlements are topping out at 2.35 to 2.4 times their value; while low-value entitlements are pushing to upwards of 2.6 times their value.

Reports indicate that a high percentage of entitlements range from the national average figure of about €155 to €200, with typical prices for these ranging from 2.1 to 2.45 times their value.

There are also some low-value entitlements trading at a relatively higher multiplier, with some buyers seeing value in entitlements below the national average as they are appreciating in value.

Doing the sums

Our discussions with agents follow a similar theme, whereby a high percentage of entitlements being offered for sale are from farmers who have greatly reduced their level of farming activity.

Younger farmers and farmers operating at a higher intensity and still hopeful of securing additional lands to activate their entitlements, seem to be opting to lease.

For farmers looking to purchase entitlements, it is worth assessing the value of entitlements over the next four years. The value of entitlements in 2026 and 2027 will remain the same, with 85% convergence ending in 2026. For those purchasing entitlements, decisions should take in to account the overall value of entitlements between now and 2027, and if there is a cost in financing such purchases.

There is no guarantee what will happen to entitlements in the next CAP. Some people buying are hopeful that the next CAP will take longer to come to fruition again and that there could be a rollover of the current CAP while this is taking place.

On the flip side, others are of the view that convergence could continue to increase in the next CAP, further diluting the value of higher-value entitlements.

For those selling entitlements, the factors to consider are the value of entitlements relative to leasing and the fact that the amnesty on the 20% claw-back on the sale of entitlements without lands ends in 2024 and as it stands returns in 2025.

Leasing market

The leasing market remains similar to 2023, following a big shift in trading dynamics.

The higher value of entitlements in the last CAP saw 60% to 70% of entitlement values return to the owner of entitlements in lease agreements. Now in the region of 60% to 65% of the entitlement value is remaining with the lessee, with the lessor (owner) receiving the balance for low-value entitlements below the national average entitlement value.

For entitlements ranging in value from €155 to €200, the share ranges from a 45:55 split in favour of the lease to a 50:50, while for higher-value entitlements there is still some deals being completed upwards of 55% to 60% of the value returning to the lessor.

Country round-up

Joseph Naughton, Joseph Naughton Auctioneers, Galway, reports that entitlement leasing continues to be the dominant form of trading for his business.

He reports that for his business the trend is typically the higher the 2024 unit value of the entitlement (BISS value), the higher the percentage returning to the owner (lessor).

Joe lists example deals at 60% returning to the owner for unit values in excess of €250, a 50:50 split for values around the natural average and 38% to 40% returning to the owner for low-value entitlements.

For sales, the trend seen at Joseph Naughton Auctioneers is the lower the unit value, the higher the multiple.

Example deals include a multiplication figure of 2.35 times their value for unit values over €250, while Joe says they have handled lots of entitlements around the national average value at 2.6 times their value.

John McGee, HMG Agri Entitlements in Meath says that he had expected to see lower numbers of entitlements being offered for sale given the spike in sales recorded in 2023. However, selling is again proving very popular, with clients taking advantage of the no claw-back. The business has seen steady trading from early February, with a lot of clients that may have leased out in previous years, now choosing to sell.

The general value of entitlements traded has ranged between 2.1 and 2.4 times their value, with some deals falling either side of this range. For HMG Agri Entitlements, it is the higher-value entitlements moving at the higher multiplier.

While there is better understanding of the new CAP payment mechanism, some farmers remain undecided on selling versus leasing. John reports the percentage share returned to the owner in leases is starting at 30% to 40% for the lowest-value entitlements of €110 to €120, rising to 45% to 50% for entitlements rising above the national average and upwards of 55% for fewer very high-value entitlements.