Why the rush to invest in entitlements?

All this talk of farmers buying and leasing Basic Payment Scheme (formerly Single Farm Payment) entitlements must surely come with a word, or two, of caution.

Is it not the case that the current Common Agricultural Policy (CAP) regime ends in a couple of years’ time?  As a result, there is no certainty as to what will be made the reference year for the subsequent regime.

So let’s assume that the current basic payment system is continued on beyond 2020.

However, if the wrong reference year is chosen by either Dublin or Brussels, from the perspective of those now investing in entitlements, they could easily find themselves up a creek without a paddle.

Moreover, given the absolute uncertainty that exists over the size of the next CAP budget, what is the point in speculating on a commodity that has a high prospect of reducing in value?

The only way the CAP budget will be maintained at current levels beyond 2020 is for all of the 27 member states of the then European Union to agree a significant hike in their contributions to Brussels.

In my opinion, the chances of this happening are pretty remote.

For the record, the UK’s departure from the EU will leave a €4.5 billion gap in Europe’s finances. That’s a pretty big hole to fill, irrespective of how upbeat anyone feels about the EU project.

Farming, in itself, is a big enough gamble at the best of times.

There is always the uncertainty of the weather, never mind farm-gate prices. Volatility always was the name of the game, where food production is concerned. So why add to this pressure by investing in a resource that comes with no long-term guarantees?

Best advice should always be sought before making any investment decision. I doubt if representatives from the Department of Agriculture, Food and the Marine would be allowed to comment on the issue of investing in entitlements. It’s far too commercial a subject for them to get involved in.

But there should be no restrictions placed on the various farming organisations from commenting on the matter.

All these bodies can easily play the role of an ‘honest broker’ when it comes to helping their members make the investment decision, or not, as the case may be.

Auctioneers, on the other hand, have ‘too much skin in the game’ to be considered as independent sources of advice.