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The process of transferring Basic Payment Scheme (BPS) entitlements by either sale or lease must be completed online this year through the transfer of entitlements application. These entitlements are worth a lot of money with over €25m worth of entitlements moving hands in 2017, through a lease or sale. The average value of these entitlements was nearly €200.
If the farmer selling or leasing out the entitlements completes the online application it is important to know that the farmer who is purchasing or leasing in the entitlements has to accept the application for the transfer to go through. This must be done before 15 May for the entitlements to be eligible for BPS payments. Farmers registered on agfood.ie can carry out this transfer themselves or they can get an agricultural consultant to do it on their behalf.
Once an application has been submitted both parties involved in the transfer will receive an acknowledgement receipt in their online correspondence and also a text from the Department. It is also important to note that just because the application is done online it does not mean that it is successful. Applicants will be notified in writing if their application has been successful.
Usage of entitlements
All entitlements are subject to a two year usage rule which means that if an entitlement is not used for two consecutive years that it will return to the National Reserve. In all cases it will be the lowest value entitlements that will revert back to the National Reserve.
Where entitlements are sold without any land they will be subject to a clawback of 20% of the number of entitlements sold. For example if 10 entitlements to the value of €200 each are sold the buyer would receive 8 entitlements at €200 each with the remaining 2 entitlements being clawed back by the Department.
Partnerships
Any farmers who are entering into a partnership or have entered into a partnership in the past number of months must be aware of the transfer of entitlements. Where any changes have occurred to a herd number the entitlements must be transferred to this new herd number or partnership herd number.
Buying entitlements
“There is a huge demand for purchase and leasing of entitlements,” according to Galway-based auctioneer Joe Naughton. “In general, farmers who own land are trying to buy entitlements while farmers leasing land are trying to lease entitlements.”
When it comes to what prices farmers are paying for entitlements, Joe said that for entitlements between €130 and €170, these are being sold for 2.2 to 2.4 times their value. Higher-value entitlements of between €180 and €300 are selling for 2.5 to 2.8 times their value, while entitlements over €300 could be selling anywhere from 2.8 to 3.1 times their value.
The same demand has been seen in Meath, according to auctioneer Robert Nixon: “A lot of people are looking for middle-of-the-road entitlements around €250 to €280, but there are few about. They would be generally be selling for twice their value or slightly more. There is not much demand for the low-value entitlements around €120 to €150.
“Very little entitlements have moved to date, but you would expect that to pick up in the next few weeks,” Robert added.
James O’Meara, auctioneer in Longford, has seen high-value entitlements make up to three times their value also: “There are a lot more calls coming in looking for entitlements than the supply we have, but that could all change in a few weeks.”
Leasing entitlements
Demand is very strong for leased entitlements. According to Robert, €250 to €280 entitlements can cost between 50% and 60% of their value, while entitlements above this can be 60% to 75% of the value.
These prices were echoed in Galway by Joe, who has seen low-value entitlements from €130 to €160 cost approximately 55% to 58% of their value, entitlements between €180 and €300 cost 58% to 63% of their value and higher-value entitlements from €300 to €700 cost up to 75% .
In Longford, James has seen prices of 50% for low-value entitlements of €150 to €200. Entitlements around the €300 mark have been making around 60% of their value, while entitlements of €420 to €450 have made up to 70%.
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