Buying BPS entitlementsHow are people

MIKEKC

How are people justifying paying 3 times the value of entitlements + 5% commission+ vat for entitlements valued at around e220 ?

MIKEKC

Any opinions on this

duffysfarm

Not trying to justify it but would someone with no entitlements be buying hoping to have something for a Base year for new cap?

MIKEKC

Yes I suppose this is possible,plus the fact that the number for sale is small at the moment. I find it impossible to justify no matter what way I do the figures

newholland mad

MIKEKC wrote: »

Yes I suppose this is possible,plus the fact that the number for sale is small at the moment. I find it impossible to justify no matter what way I do the figures

A bit like expensive con acre or store cattle. Everybody thinks there too expensive yet lots willing to pay

MIKEKC

Looks like it, no wonder people are cribbing that they can't make money when they are squandering what they have. I'm surprised that nobody is justifying the prices being paid

MIKEKC

Maybe they can't

rangler1

MIKEKC wrote: »

Maybe they can't

There's farmers gambling that these are reference years for BPS post the next CAP reform in 2020....... Maxing your entitlements has proved good policy before the last few reforms

el_gaucho

rangler1 wrote: »

There's farmers gambling that these are reference years for BPS post the next CAP reform in 2020....... Maxing your entitlements has proved good policy before the last few reforms

It will be a sickener if that gamble doesn't pay off!
Unless you're the one selling the entitlements of course.

rangler1

el_gaucho wrote: »

It will be a sickener if that gamble doesn't pay off!
Unless you're the one selling the entitlements of course.

They'll get their money back before 2020.....three years payments,,,

MIKEKC

Three years won't get your money back. Taxman will want his share. You would need four years. If people held their cool the price would drop. Same as cattle situation

rangler1

MIKEKC wrote: »

Three years won't get your money back. Taxman will want his share. You would need four years. If people held their cool the price would drop. Same as cattle situation

Why will they drop when the current owners can claim their full value every year from them all or lease them all out for 70% of their value every year,
I keep referring to 'them all' because you can only sell 80% of them.......there isn't going to be too many sales under those conditions

kk.man

They might not seem like value on the face of it but
They are an asset
They are used by banks for loans etc
A young person starting out has little choice but to buy
People who waited for national reserve were dissapointed in the past
It is worth a gamble if you are serious about getting max from your land
Life is full of no pain no gain!

rangler1

kk.man wrote: »

They might not seem like value on the face of it but
They are an asset
They are used by banks for loans etc
A young person starting out has little choice but to buy
People who waited for national reserve were dissapointed in the past
It is worth a gamble if you are serious about getting max from your land
Life is full of no pain no gain!

And the people that miss out or don't bother will swear that those that gained had inside information....tell me about it

MIKEKC

I am not saying one shouldn't buy. Bought them myself a number of years ago. The point I am making is that at present prices it takes so long to get your money back. Who knows what will happen after 2019.? With the UK money gone from the kitty and the cuts for national reserve .Young farmers have got a lot of entitlements from national reserve mostly at the expense of people who have worked hard to build them up in the reference years. The big problem I see with the national reserve is the so called young farmer gets free entitlements then in a few years gets more from parents and they can end with a large payment, while the farmer that suffered a cut in his payments sees his going down.Macra's main aim seems to be to get rid of the oul lads as soon as possible.

MIKEKC

MIKEKC wrote: »

I am not saying one shouldn't buy. Bought them myself a number of years ago. The point I am making is that at present prices it takes so long to get your money back. Who knows what will happen after 2019.? With the UK money gone from the kitty and the cuts for national reserve .Young farmers have got a lot of entitlements from national reserve mostly at the expense of people who have worked hard to build them up in the reference years. The big problem I see with the national reserve is the so called young farmer gets free entitlements then in a few years gets more from parents and they can end with a large payment, while the farmer that suffered a cut in his payments sees his going down.Macra's main aim seems to be to get rid of the oul lad as soon as possible

benjydagg

The highest deal I heard of was 4 times value. Plus costs.

MIKEKC

benjydagg wrote: »

The highest deal I heard of was 4 times value. Plus costs.

They must be very high value entitlements

Bass Reeves

MIKEKC wrote: »

They must be very high value entitlements

or very low value

J.O. Farmer

MIKEKC wrote: »

They must be very high value entitlements

Hard to see value though and even less so with high value entitlements which are likely to be flattened considerably during the next CAP.

If you can lease entitlements they're about 2/3 face value including greening so you gain 1/3.

Add to that leasing is fully tax deductible so maybe another 1/3 to 1/2 of what you pay so let's say 20% of face value.

Add those together and you get 50% of face value. That's 8 years to break even. There's only 3 years in this bps and if you assume the next scheme runs for 5 years it's over and your only breaking even not allowing for capital tied up, expenses or flattening of the face value.

It's a huge gamble at that price unless

1. You are on the low rate of tax

2. They are entitlements well below the national average and therefore likely to increase in value

Or

3. They are needed as collateral for other farm borrowing.

3 times face value I think would be a more reasonable risk to take. I wouldn't like to pay 4 times the value.

benjydagg

6.3 entitlements sold. Value per unit (2017) €843/HA. Reducing to €700/HA in 2019.
20% clawback, so the buyer bought 5.04 units.

He/She paid 4 times. i.e. €843 x 5.04 x 4 =

PLUS commission.....

I can't understand the logic...

bonaparte2

I couldn 't understand the logic of the prices people paid for unpunched weanlings back in the reference years.

I do now

benjydagg

bonaparte2 wrote: »

I couldn 't understand the logic of the prices people paid for unpunched weanlings back in the reference years.

I do now

I bought my first suckler cow quota from a neighbour circa 1996... neighbour thought I was mad paying 90 punts each.
21 years later I'm still getting paid for them..

MIKEKC

benjydagg wrote: »

I bought my first suckler cow quota from a neighbour circa 1996... neighbour thought I was mad paying 90 punts each.
21 years later I'm still getting paid for them..

Did the same myself, but this situation is unlikely to happen again. There is serious opposition to the present system continuing post 2019

Bass Reeves

MIKEKC wrote: »

Did the same myself, but this situation is unlikely to happen again. There is serious opposition to the present system continuing post 2019

I think this is the big unknown this time. In any revamp until now the IFA had a huge say. It was seen as a nationwide organisation and had huge sway with the politicians. Also in last revamp it pawned off that farmers on poorer land would win with pillar 2 funding. However P2 funded schemes have been a dissappointment and GLAS has suited larger farmers rather than mid sized like REPS did.

Lads paying over the top for high value entitlements may be taking a loss come 2019.

sea12

If someone qualified as a young farmer and you are leasing in entitlements. Are you aswell to lease in lower value ones and get the top up from yfs or do you get the value of the yfs no matter what value your entitlements are.

sea12

sea12 wrote: »

If someone qualified as a young farmer and you are leasing in entitlements. Are you aswell to lease in lower value ones and get the top up from yfs or do you get the value of the yfs no matter what value your entitlements are.

Bump any one any idea?

mayota

sea12 wrote: »

Bump any one any idea?

You get the YFS regardless of value once you qualify for YFS.