Entitlements

benjydagg

just do it wrote: »

Agree. I stuck your example into a spreadsheet and even with a lower purchase
cost of €22,825 for those 5 entitlements over the 6 years he'd be €700 worse off. If he pays tax on lower rate he'll be down €7,777. On the higher rate he'd be down €12,200.

Auctioneers are laughing. Ultimately it comes down to the purchase price multiple and your tax rate as to whether it's worth buying.

I paid 2.3 time value for €1,500/ha last year. That made sense as I have 2013 banked, and 6 years to come. It

looks like I won't be buying anymore as P Young has explained in detail that there is no upside to upgrading in today's market.
However,there is still a very good reason to cover any naked acres anyone might have.

And for some of us with high average entitlement value, if we downgraded some of the high ones, the cuts coming could be lessened.

Do your sums.
Then do them again,
Then ask opinions.
Tread carefully.

20silkcut

It seems it all hinges now on whether the minister announces that the payment recieved or entitlements held will be carried into 2015.
Hope he clarifies this soon.

TUBBY

is there anything about stacking in future. For example if you lost leased land in 2017, is there provision to stack or will ya lose the entitlements with the land.

ChewyLuey

Is there a market to sell rock bottom value entitlements ? (22 @€;25 each)
It could be logical for me to buy higher value entitlements (subject to finalisation of some details like how quickly convergence will work etc.) but I think I would need to get rid of my existing low value entitlements.
My concern is If I bought higher value ones but got stuck with my old ones they may average out the payment between both sets which could reduce the benefit of the higher value ones.

merryberry

TUBBY wrote: »

is there anything about stacking in future. For example if you lost leased land in 2017, is there provision to stack or will ya lose the entitlements with the land.

Staking/ consolidation of entitlments will not b part of cap 2014-2020. Exception being 2014 only but once new basic payment scheme commences in 2015, stacking will not b an option

The Real Elmer Fudd

My lease runs out on an out farm at the end of 2014 and I have just been told that the land will then be sold. It consists of 10 ha and I have 10 entitlements worth €400 each to cover that farm. I have no interest in buying it at the kind of money they want for it and the chances of me finding another 10 ha that suits me is slim.

So what I'm asking is should I sell my 10 entitlements in 2014 or should I claim the SFP and DAS on them for 2014 and subsequently sell them in 2015? Will I even be allowed to sell them post 2014 and what are they likely to be worth?

merryberry

The Real Elmer Fudd wrote: »

My lease runs out on an out farm at the end of 2014 and I have just been told that the land will then be sold. It consists of 10 ha and I have 10 entitlements worth €400 each to cover that farm. I have no interest in buying it at the kind of money they want for it and the chances of me finding another 10 ha that suits me is slim.

So what I'm asking is should I sell my 10 entitlements in 2014 or should I claim the SFP and DAS on them for 2014 and subsequently sell them in 2015? Will I even be allowed to sell them post 2014 and what are they likely to be worth?

You say you had a lease and that they’re your entitlements so I presume you generated these entitlements? (Had you this land from 2000-2002). If so, you may be able to consolidate in 2014 (last year you can do so). What you declare on your SPS’14 determines the initial payment or new entitlement value under the new basic payment scheme. Two possible scenarios for you are

1. Consolidate SPS entitlements created on leased lands onto owned land. You retain what you were originally claiming subject to linear cuts in 2014 (c.10% if total 2013 payment if >€5,000 after modulation cut). Divide this figure by your eligible area and this gives you ur initial basic payment entitlement value. If it is under 90% of national average (estimated at €170) your payment will rise by 1/3 of the difference to minimum 60% of national average over the period 2015-2019. If you are over national average your payment will decrease over the same period. How much I’m sure. DAFM to determine the amount of rebalancing needed i.e. how much to take from those above average to give to those under the average to meet the minimum levels specified in the convergence model.

2. The one thing that is definite here is that you will not be able to sell SPS entitlements in 2015. The SPS entitlement will be extinguished on 01/01/15 and will be replaced with new BPS entitlements. If you sell your entitlements that you generated, then your initial payment in the BPS will be the value of the entitlements held on your own land only. Apply the calculations as above to estimate what your situation will come 2019. Note that selling entitlements is subject to CGT and auctioneers fee.

Losing those 10ha is bad enough but if you do nothing you stand lose those entitlements that you created.

The Real Elmer Fudd

merryberry wrote: »

You say you had a lease and that they’re your entitlements so I presume you generated these entitlements? (Had you this land from 2000-2002). If so, you may be able to consolidate in 2014 (last year you can do so). What you declare on your SPS’14 determines the initial payment or new entitlement value under the new basic payment scheme. Two possible scenarios for you are

1. Consolidate SPS entitlements created on leased lands onto owned land. You retain what you were originally claiming subject to linear cuts in 2014 (c.10% if total 2013 payment if >€5,000 after modulation cut). Divide this figure by your eligible area and this gives you ur initial basic payment entitlement value. If it is under 90% of national average (estimated at €170) your payment will rise by 1/3 of the difference to minimum 60% of national average over the period 2015-2019. If you are over national average your payment will decrease over the same period. How much I’m sure. DAFM to determine the amount of rebalancing needed i.e. how much to take from those above average to give to those under the average to meet the minimum levels specified in the convergence model.

2. The one thing that is definite here is that you will not be able to sell SPS entitlements in 2015. The SPS entitlement will be extinguished on 01/01/15 and will be replaced with new BPS entitlements. If you sell your entitlements that you generated, then your initial payment in the BPS will be the value of the entitlements held on your own land only. Apply the calculations as above to estimate what your situation will come 2019. Note that selling entitlements is subject to CGT and auctioneers fee.

Losing those 10ha is bad enough but if you do nothing you stand lose those entitlements that you created.

Thanks Merryberry, that has been a massive help. I wasnt aware that i could consolidate my entitlements in 2014. I inherited the the herd no and the entitlements in 2007 but they where generated on the same 10 ha from 2000 to 2002. I took over the lease in 2007 along with the herd no & entitlements.

I will have to check but as far as i am aware some entitlements where consolidated back in 2005 but i would assume this would have no bearing on me if i consolidate again now in 2014.

I wil have to sit down and do out the figures but i would imagine that consolidating them will be my best option.

I was aware about CGT and Auctioneers fee. CGT at 33% and auctioneers fees at aprox 3% is a nice sting in the tail if selling.

The 10ha in question sits between to two young and expanding dairy farmers who will probably not get the chance to increase their grazing block beside them for at least another 20 years. The milking parlour of one farmer is about 300 yards from the farm boundary so its hard to see how they could pass it. The owner sees it as an ideal time to sell with my lease running out at the end of 2014 and with dairy expansion kicking in in 2015. It is envisaged by the owner that between myself and the two dairy lads going at it that he is going to get a tidy sum for the farm. Personally it wont be worth going over the market value on it for me but in the long run it probably would for the other two lads.

The Real Elmer Fudd

merryberry wrote: »

1. Consolidate SPS entitlements created on leased lands onto owned land. You retain what you were originally claiming subject to linear cuts in 2014 (c.10% if total 2013 payment if >€5,000 after modulation cut). Divide this figure by your eligible area and this gives you ur initial basic payment entitlement value. If it is under 90% of national average (estimated at €170) your payment will rise by 1/3 of the difference to minimum 60% of national average over the period 2015-2019. If you are over national average your payment will decrease over the same period. How much I’m sure. DAFM to determine the amount of rebalancing needed i.e. how much to take from those above average to give to those under the average to meet the minimum levels specified in the convergence model.
.

Merryberry, I am over the national average so mine will be reducing but will that be a reduction of 1/3 of the initial difference spread over the 5 years

or 1/3 of the reducing difference each year?

merryberry

The Real Elmer Fudd wrote: »

Merryberry, I am over the national average so mine will be reducing but will that be a reduction of 1/3 of the initial difference spread over the 5 years

or 1/3 of the reducing difference each year?

Elmer, for those above the average, I don't know exactly how its calculated. Much of it has to do with entitlement re-balancing which can't be determined for certain until late 2015 once DAFM know the exact number of entitlements submitted, the effect of upward convergence, and how entitlements submitted fits with the Pillar I national envelope. I think ur best bet in present situation is to look at Peter Youngs entitlement reckoner in IFJ ed. 8th Feb. 2014.

benjydagg

The Real Elmer Fudd wrote: »

My lease runs out on an out farm at the end of 2014 and I have just been told that the land will then be sold. It consists of 10 ha and I have 10 entitlements worth €400 each to cover that farm. I have no interest in buying it at the kind of money they want for it and the chances of me finding another 10 ha that suits me is slim.

So what I'm asking is should I sell my 10 entitlements in 2014 or should I claim the SFP and DAS on them for 2014 and subsequently sell them in 2015? Will I even be allowed to sell them post 2014 and what are they likely to be worth?

Be careful....

Some of the advice being given here is complete and utter nonsense.

It has not been decided yet if the amount of money claimed in 2014 or the amount of entitlements held will be the amount of money brought forwards into the BPS 2015 by individual. The lesser amount of land claimed in 2013 or 2015 will be the amount of units brought forward by you.
You may gain dramatically by doing nothing.

DO NOT sell until this is clarified.

No sales have being processed by entitlements section in Portlaoise as of today 23/02/2014.
We will all be informed of the new values of our 2014 units in the next week or so. It will be approx. 10.5% reduction as per IFJ this week.

Entitlements WILL be trade able in the new scheme. However, the value will be fluid and will change from year to year.

20silkcut

benjydagg wrote: »

Be careful....

Some of the advice being given here is complete and utter nonsense.

It has not been decided yet if the amount of money claimed in 2014 or the amount of entitlements held will be the amount of money brought forwards into the BPS 2015 by individual. The lesser amount of land claimed in 2013 or 2015 will be the amount of units brought forward by you.
You may gain dramatically by doing nothing.

DO NOT sell until this is clarified.

No sales have being processed by entitlements section in Portlaoise as of today 23/02/2014.
We will all be informed of the new values of our 2014 units in the next week or so. It will be approx. 10.5% reduction as per IFJ this week.

Entitlements WILL be trade able in the new scheme. However, the value will be fluid and will change from year to year.

Why have they not decided this yet I can't understand everything else has been decided and this is one of the most important aspects.

Username John

benjydagg wrote: »

Entitlements WILL be trade able in the new scheme. However, the value will be fluid and will change from year to year.

I dont get how the value will change year to year? How will this work? What will it be dependant on?

merryberry

Username John wrote: »

I dont get how the value will change year to year? How will this work? What will it be dependant on?

A % of your owned 2014 entitlement will form the basis for your 2015 BPS (Basic Payment Scheme 2014 – 2020) entitlement (more info on that here http://www.agriland.ie/news/aca-members-updated-new-cap-entitlements-regime/). Your initial BPS entitlement will rise or fall over the period 2015-2019 and this is known as convergence. Lower value entitlements will gradually rise to a minimum level by 2019. To fund this gradual rise of low value entitlements, higher value entitlements will be reduced in value over the same period.

Not sure about them being tradeable but open to correction on that. If they are tradeable I presume you can’t buy entitlements that push you above the €700 BPS ent ceiling????

They will be transferable and this time transferable by way of lease without land which is a departure from the previous scheme. SPS entitlement will not be tradeable as they will be gone by the end of the year.

Username John

merryberry wrote: »

A % of your owned 2014 entitlement will form the basis for your 2015 BPS (Basic Payment Scheme 2014 – 2020) entitlement (more info on that here http://www.agriland.ie/news/aca-members-updated-new-cap-entitlements-regime/). Your initial BPS entitlement will rise or fall over the period 2015-2019 and this is known as convergence. Lower value entitlements will gradually rise to a minimum level by 2019. To fund this gradual rise of low value entitlements, higher value entitlements will be reduced in value over the same period.

Not sure about them being tradeable but open to correction on that. If they are tradeable I presume you can’t buy entitlements that push you above the €700 BPS ent ceiling????

They will be transferable and this time transferable by way of lease without land which is a departure from the previous scheme. SPS entitlement will not be tradeable as they will be gone by the end of the year.

Thanks merry.

I get that convergence, either down to 700 or up to 150 by 2019.

But if you purchase entitlements in 2015 which are worth between 150 and 700 - will these stay at the same value til 2019?

Also, 2014 will be the 'reference year' for the BPS.
Let's say that I have low value entitlements, which will be moving up every year. If I purchase entitlements worth 500/ha in 2015 - I assume these won't affect the gradual increase to 150 on my other entitlements?

merryberry

Username John wrote: »

But if you purchase entitlements in 2015 which are worth between 150 and 700 - will these stay at the same value til 2019?

Also, 2014 will be the 'reference year' for the BPS.
Let's say that I have low value entitlements, which will be moving up every year. If I purchase entitlements worth 500/ha in 2015 - I assume these won't affect the gradual increase to 150 on my other entitlements?

No bother John but I'm no good to you on the above. I don't think Ireland has made any decision on trading BPS entitlements post 2015. I'm not saying that it won't happen; just haven't come across it in the public domain. No official confirmation on BPS trading from DAFM. Well just wait and see.

dminor123

Hi , I have 20 hectares plus 10 ha of forestry, I've been farming for the last 5 years . I've no entitlements , never had, I'm over 45 working outside farm full time earning just over 30k a year, should I try and buy entitlements ??? Thanks for any assistance !!

Green farmer

How are entitlements valued ? Is there any particular multiplier used ?

simx

Green farmer wrote: »

How are entitlements valued ? Is there any particular multiplier used ?

Usually 2-2.5 times face value I think

D-mac

dminor123 wrote: »

Hi , I have 20 hectares plus 10 ha of forestry, I've been farming for the last 5 years . I've no entitlements , never had, I'm over 45 working outside farm full time earning just over 30k a year, should I try and buy entitlements ??? Thanks for any assistance !!

Sound like your in a good position for the Scottish deagation. keep an eye and ear out for information on it.

Sami23

D-mac wrote: »

Sound like your in a good position for the Scottish derogation. keep an eye and ear out for information on it.

Can someone please explain the Scottish Derogation to me in simple terms. Thanks

towzer2010

Sami23 wrote: »

Can someone please explain the Scottish Derogation to me in simple terms. Thanks

Well from a hand-out we got at the last btap meeting it says the Scottish derogation is if you never held entitlements but were active in 2013.

Active Farmer is
1. Farmer: rearing, growing, harvesting, milking, keeping animals or

2. Maintaining land in good agricultural and environmental condition or

3. Minimum Activity on marginal land (* to be defined)

poor farmer

I have a farm leased in with entitlements for the last six years.This is all of the owners land and entitlements. The lease is up for renewal .the entitlements are €250/hectare
Any help /advice on what happens now.

footfall789

Hi ,

I am in the opposite side of the Fence as it were . I have entitlements with a Farm that I have leased for the past 7 years , valued around €230 per Hectare , I do not farm myself .

I was wondering what happens this year with regards to Entitlements for non farmers who are leasing Entitlements to somebody else , do they have to sell them this in order to realise some value for them or is their value lost already .

Regards.

Green farmer

I'm no expert, and trying to understand it myself but, the department have set up a section to deal with this, I believe that unless you sell them or gift them to an active farmer, they'll be lost. As mentioned above their worth 2 to 2.5 face value. The department are meant to be writing to people at the moment for anyone effected.

footfall789

Thanks Green Farmer , will follow up with the Department on this .

poor farmer

Green farmer wrote: »

I'm no expert, and trying to understand it myself but, the department have set up a section to deal with this, I believe that unless you sell them or gift them to an active farmer, they'll be lost. As mentioned above their worth 2 to 2.5 face value. The department are meant to be writing to people at the moment for anyone effected.

can anyone explain why if the leasor has to sell/gift then it only suits the tenant farmer to buy , Thanks,

Green farmer

From what I understand they can be bought and sold on the open market. A few auctioneers even specialise in it. I think if either party is being unreasonable, then source/ sell through open market. However if a good relationship exists between parties then it's easier to deal with someone you already know, without paying commission.

paddysdream

poor farmer wrote: »

can anyone explain why if the leasor has to sell/gift then it only suits the tenant farmer to buy , Thanks,

As far as I know you must have claimed on and been paid on at least one eligible hectare in (I think)2012.Think if you did so then you will be eligible to retain all your entitlements,including those leased out.Anyone who leased out 100% of their entitlements will either have to sell them(at least as a paper transaction)or lose them when the new cap scheme starts in 2015.
Its basically to distinguish between an "active" farmer and someone renting or leasing out all their land and not carrying on the business of farming(definition is pretty vague and all encompassing).

Think the decision was to pay people on the value of entitlements owned carried into 2015 and not the value of entitlements paid to an individual in the previous years.Important distinction.

footfall789

Anyone know of a good Auctioneer that deals with selling entitlements as I suppose I have to sell mine now as I was not active in 2012/13. :{