Trading Single Farm Payment Entitlements

Although the RPA is still struggling to definitively establish Single Payment Scheme entitlements in England, attention is now turning to their transfer and tradability once they are established.

Tim Parsons, of H&H Bowe answers some of the common questions.

When can transfers take place ?
The establishment process is critical to the transfer of Entitlements. Until the RPA has carried out all the necessary checks and notified a producer of the number and value of his Entitlements no transfer is possible. The RPA will allocate ordinary and set-aside Entitlements, both of which will be transferable. In order to be effective and to receive a payment from an Entitlement, it must be held on the 15th May in the year of claim. The transfer however has to be notified to the RPA 6 weeks before it is effective. That means that the last date a transfer can be notified for the 2006 claim is midnight on the 2nd April 2006. This is where one problem lies. It may be that some claimants will still not have been notified of their Entitlement by that date, for example because they have an outstanding hardship or national reserve appeal, or ultimately just because the RPA has not completed the process.

How will transfers be possible ?
Transfers will be possible between "farmers", with or without land. The definition of a farmer is still subject to consultation, particularly on the issue of retired farmers who still hold Entitlements. Transfers with land can be either by sale, gift or lease. In each case to qualify the number of Entitlements and the area being transferred must be equivalent. A lease for land and Entitlements must be for the same period of time, and have the same start and end dates. Transfers without land can only take place where 80% of the Entitlements have been used in 2005 or the unclaimed Entitlements are surrendered to the National Reserve.

Can I transfer only the historic element or flat rate element of an entitlement ?
No. Once established, the historic and flat rate elements are inseparable. Each Entitlement will have a single value that will change over the next eight years as the transition takes place to wholly regional payments.

Can National Reserve entitlements be transferred ?
Where an allocation from the National Reserve increases an Entitlements value by more than 20%, or Entitlements have been allocated solely from the National Reserve, those Entitlements can not be transferred for 5 years from their allocation. Transfer and the 10 month period. An Entitlement has to be held on the 15th May to claim payment, although it can be transferred during the 10 month period of the transferor. The transferor however has to have at his disposal sufficient land through the 10 month period to support the number of claimed Entitlements.

What will Entitlements be worth ?
Until an open market is created it is difficult to be specific. Several issues will affect values including the income potential from the Entitlement; supply and demand; the number of "naked acres" and the rates of modulation and other deductions. Industry commentators have suggested numerous ranges of value, but generally these now fall into a range between 2 and 4 times the payment in the year of transfer. The biggest effect will however be supply and demand, and until the market becomes active in 2006 it is very difficult to be specific on value.

Is H & H Bowe going to trade Entitlements ?
Yes. We are currently taking names and details of those wishing to trade entitlements, once they are definitively established.

Anyone wishing to be contacted when trading commences should contact Catherine Mattinson at H & H Bowe on 01228 640920.

H & H Bowe also has a team of qualified Land Agents able to advise of all aspects of the Single Payment Scheme including Entitlement trading and transfer.

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