Entitlements trade increasing as deadline draws near
The entitlements trade is beginning to pick up as the deadline for buying and selling draws near. While there is huge interest in buying entitlements, there is no appetite for selling due to the 20% clawback; the majority of business is in leasing.
Speaking to AgriLand, Seán Doyle, of Doyle Auctioneers, outlined how the trade is moving. He said: “The demand is just beginning to increase now. When we’re getting close to the finish line people start making calls.
“To be fair, it was hard for farmers to be thinking about entitlements with the weather conditions that were there. They’re only beginning to look at it now,” he explained.
There is a very strong demand for the purchasing of entitlements; but there’s only a certain amount of them out there because of the 20% clawback.
“Not every farmer is going to sell because they’re losing on the clawback and losing on capital gains,” Seán added.
Seán outlined that entitlements worth €250-350 are selling for 2.25-2.50 times their value and people are very interested in buying.
“The first call you will get is: ‘Have you anything to sell?’ When you haven’t, they might look at something to lease; but most people are trying to buy.
“There’s only a certain amount to buy because to lose 20% of what you’re selling and then to pay the capital gains, it just doesn’t pay.”
The majority of trade is in the leasing of entitlements. The value of the entitlement and the percentage of that entitlement, which farmers are paying to lease, is outlined below.
- <€100-150: 60-63%;
- €200-250: 65-70%;
- €250-400: 70%;
- €500+: 72-75%.
No obvious trends
There is no trend in the type or location of farms. On this, he said: “You could get farmers from Co. Wicklow ringing to buy and you could get someone from the heartland of dairy farming in Co. Cork.
Farmers will all try and buy because they see it as an investment for the farm.
“Tillage farmers are more inclined to lease because they’re not sure if they will be on that land again the following year. If they buy them, they have to find other land. If they’re only leasing land, they don’t have to worry because they don’t have the entitlements.
“There’s no trend at all. I would say on average, on last years figures, most of my entitlements ended up heading to Co. Donegal. A lot of my entitlements went to Co. Waterford and Co. Wexford, but there’s no trend,” he concluded.