Trading of single payment entitlements has increased significantly over recent weeks, as farmers and other buyers look to invest in what is perceived to be a safe asset in an uncertain wider economy.

“In the past two weeks entitlement trading has really picked up,” George Paton from Wiltshire consultant Webb Paton told Farmers Weekly on Tuesday (24 February).

“The last two weeks of the entitlement trading year, which runs up to 2 April, are normally when most trading is done, but we’ve already seen trade is far busier than last year.”

Several factors were driving the strong trade, he said. “We’re seeing quite a lot of interest from those with small parcels of land, say 10-20 acre blocks, who haven’t claimed against it before, but are now buying entitlements. Compared with other forms of investment, it seems like a pretty safe place to put money at the moment, with a high return on capital.”

For a one-off payment of, say, £130/ha for area-only entitlement, there was a guaranteed four-year return, assuming eligibility conditions were met, and even the possibility of a financial return post-2013, depending on what happened with CAP reform, he said. “Actual total return on a £130/ha entitlement until 2012 is actually £737.02/ha after deductions.”

The Rural Payments Agency‘s decision to treat set-aside entitlements as “normal” entitlements from 1 January 2009, instead of having to claim set-aside first, had also created extra activity in the market, said Mr Paton. “This time last year, set-aside entitlements didn’t really have a value and many were paying up to £100/ha to get rid of them. Now they’ve become normal entitlements, there’s a real opportunity for anyone looking to trade them.”

In 2008 non-SDA English entitlement was worth €141.93/ha (£112.17/ha at a conversion rate of €1=£0.79030), which, after modulation, would pay about €154.52/ha in 2009, €190.71/ha in 2010, €225.92/ha in 2011 and €247.76/ha in 2012, he said. “But you’ve got to remember there’s a two-year ‘use by’ rule now, so any entitlement unused for two years will be withdrawn.”

Another factor that had strengthened demand for entitlements was the fact that for the first time, land under permanent fruit and vegetables (including commercial orchards), nursery crops and vines could be used to claim SPS entitlements against, Laurence Gould‘s James O’Gram said. “2009 is the first time top fruit growers have had this opportunity and people are looking to buy.”

Also, some had experienced problems with entitlement statements, which had only just being sorted out, so they were now in a position to trade if they wanted, he added.

Single payment entitlements prices

Value €/ha Value £/ha Price £/ha Multiplier

€ 141.93 £112.17 £130 1.31

€ 232.50 £183.74 £165 1.02

€ 282.12 £222.96 £215 1.09

€ 331.08 £261.65 £245 1.06

€ 438.84 £346.82 £295 0.96

€ 1,013.60 £801.05 £480 0.68

All prices relate to English non-SDA entitlements traded this week

Source: Webb Paton