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Cap reform convergence
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Dinzee Conlee wrote: »I was thinking about that post yesterday as well Mayo, as its maybe not something I hadnt though through before...
Say you had 2 lads with 500k to spend on a farm
500k in hill farm country might buy ~300 acres - that ~1700/acre
500k in prime country might buy ~35 acres - thats ~14k/acre
At 250/ha CAP payment, in the new converged world...
The hill farm would get 25-30k, allowing for some reduction in area
The prime farm would get ~4k
So, maybe a difference of 20k...
My calculations are very rough, I havent researched those figures, they are more going from the articles linked above plus what I have heard myself in land sales locally...
I accept prime land will generate more money from farming than poor land. But 16k is a lot to generate on 35 acres, to get to the same annual return as the hill farm...
Going through that scenario, it doesn't seem very right somehow. I suppose its kinda the opposite of the situation we have now?
But I dont know in this scenario if a simple reversal is right...
The national average is currently €265ish give or take 1 or 2 euros.
Convergence to date has brought people up to 60% of the national average.
From what I understand, just to be inflammatory (:D) "the haves" don't want to see convergence exceed 75% of the national average (today) by >>> 2027 <<<
There are other complicating factors to take into account, front loading is one, that won't see "straight" convergence, so no more than the journal front page a couple of weeks ago figures can be made look a certain way if influencing factors are left out. On front loading, if convergence were to go to 85%, and then depending on the # of hectares per farm and in total the dept think should be front loaded, and the payment rate on those front loaded figures, that would see the 85% recipient likely not budge from their €figure income today, and indeed they may become a contributor towards front loading not just from a forfeited increase (from 60-85%) but out of the 60% also.
So the basis figures of your calculation aren't correct. As well as that, your figures portray a close to 100% convergence scenario happening today, where as the reality is that whatever convergence figure agreed, the final result won't be a fact until 2027 (and it sure as hell won't be 100%).
And a lot can happen between now and then.0 -
MayoAreMagic wrote: »I get what you say, but consider for a second who is actually buying this land in the scenario you describe. Young farmers? Unlikely to be able to afford the level of initial investment, and would probably need more productive ground to be farming on anyway, if they are true young farmers establishing their own farm.
The guy who buys that land knows the system well so is probably already farming, and they have capital to invest so must be on a good payment, with maybe an off farm job etc.
Step forward, the established farmer with a good level of payments already. So although it might be hill ground, the guy in the perfect position to make money off it is the established guy who got good entitlements and is now leveraging that to put their son in a similar position.
Re the 700k farm - a great opportunity, but moreso for someone who would rent the house out on airbnb and rent the land to young farmers at a high rate. When that is your best potential profit making plan, it speaks volumes about the potential of actually farming it.
The fella near me who was rumoured to have done it did it for that reason. Bought very cheap hilly ground somewhere so that his son could establish and draw payments on it. It would be a no-brainer really if you knew that they BPS over even the next 5 years were going to cover a large chunk of the repayments!
The only thing that will happen if there is full convergence for these places is that the prices of those hill farms will shoot up. Which will make the current owners very happy of course!0 -
Dinzee Conlee wrote: »I was thinking about that post yesterday as well Mayo, as its maybe not something I hadnt though through before...
Say you had 2 lads with 500k to spend on a farm
500k in hill farm country might buy ~300 acres - that ~1700/acre
500k in prime country might buy ~35 acres - thats ~14k/acre
At 250/ha CAP payment, in the new converged world...
The hill farm would get 25-30k, allowing for some reduction in area
The prime farm would get ~4k
So, maybe a difference of 20k...
My calculations are very rough, I havent researched those figures, they are more going from the articles linked above plus what I have heard myself in land sales locally...
I accept prime land will generate more money from farming than poor land. But 16k is a lot to generate on 35 acres, to get to the same annual return as the hill farm...
Going through that scenario, it doesn't seem very right somehow. I suppose its kinda the opposite of the situation we have now?
But I dont know in this scenario if a simple reversal is right...
You are right, but that doesnt factor in the need for the farmers to have full entitlements for the farm first and foremost. Are two lads spending 250,000 on land going to qualify as young farmers? In the real world it is unlikely. If they dont then they will need to buy them.
Secondly, how much stock will they need to stock the land the the minimum requirements? Those wont be small numbers and the ground will need to be travelled on foot. Will they need to farm it full time?
Thirdly, the payment must be split between the two of them.
Fourthly, there is nothing stopping the lads buying the good land from buying the hill farm instead.
In reality, the prices involved will change as the focus of agriculture changes. Comparing prices from a few years back and discussing them in light of new directions in agriculture wont ever give an accurate reflection of the state of play, be it land or anything else. We have a habit of looking at the extreme cases, rather than recognising them as an exception rather than the rule. 'Well I know of a lad that...insert extreme case' Are there many hill farms of that size in the country? Most I know of are around 30-40 hectares including commonage.0 -
MayoAreMagic wrote: »You are right, but that doesnt factor in the need for the farmers to have full entitlements for the farm first and foremost. Are two lads spending 250,000 on land going to qualify as young farmers? In the real world it is unlikely. If they dont then they will need to buy them.
Secondly, how much stock will they need to stock the land the the minimum requirements? Those wont be small numbers and the ground will need to be travelled on foot. Will they need to farm it full time?
Thirdly, the payment must be split between the two of them.
Fourthly, there is nothing stopping the lads buying the good land from buying the hill farm instead.
In reality, the prices involved will change as the focus of agriculture changes. Comparing prices from a few years back and discussing them in light of new directions in agriculture wont ever give an accurate reflection of the state of play, be it land or anything else. We have a habit of looking at the extreme cases, rather than recognising them as an exception rather than the rule. 'Well I know of a lad that...insert extreme case' Are there many hill farms of that size in the country? Most I know of are around 30-40 hectares including commonage.
How do they work out stocking rates though? Would it not be on the entire land base?
A lad with 200 acres of dairy and beef in North Cork who buys a mountain farm of 100 acres of hill farm in West Cork probably has his stocking rate calculated over his entire "farm" and is already over minimum threshold. Might also bring him under nitrates limits as well by having the extra maps!
They don't do spot checks or monitoring of individual plots do they?0 -
Donald Trump wrote: »The fella near me who was rumoured to have done it did it for that reason. Bought very cheap hilly ground somewhere so that his son could establish and draw payments on it. It would be a no-brainer really if you knew that they BPS over even the next 5 years were going to cover a large chunk of the repayments!
The only thing that will happen if there is full convergence for these places is that the prices of those hill farms will shoot up. Which will make the current owners very happy of course!
Yes of course he did. But where did the money come from to buy it? I.e. he wasnt a young farmer just starting out. Is his own farm a hill farm? Im guessing not.
It is the trickle down effect of some getting good entitlements and others not. Fast forward 10 years and the lads who got the good ones are buying up the farms of the lads who didnt. They are in tune with farms schemes while those who got f all arent because they were making nothing out of it and had to go to dublin/london etc working in a different area altogether. So the worthless farm is left idle and the older generations die off. Then the lad with good payments sees the potential change in tack and uses his good-payments-money to buy the hill farm and sticks in his useless son to milk the system.
Progress...0 -
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Donald Trump wrote: »How do they work out stocking rates though? Would it not be on the entire land base?
A lad with 200 acres of dairy and beef in North Cork who buys a mountain farm of 100 acres of hill farm in West Cork probably has his stocking rate calculated over his entire "farm" and is already over minimum threshold. Might also bring him under nitrates limits as well by having the extra maps!
They don't do spot checks or monitoring of individual plots do they?
They do checks, they do walk commonages, and insist on GPS photographic evidence as well as the usual paper trail.0 -
MayoAreMagic wrote: »Yes of course he did. But where did the money come from to buy it? I.e. he wasnt a young farmer just starting out. Is his own farm a hill farm? Im guessing not.
It is the trickle down effect of some getting good entitlements and others not. Fast forward 10 years and the lads who got the good ones are buying up the farms of the lads who didnt. They are in tune with farms schemes while those who got f all arent because they were making nothing out of it and had to go to dublin/london etc working in a different area altogether. So the worthless farm is left idle and the older generations die off. Then the lad with good payments sees the potential change in tack and uses his good-payments-money to buy the hill farm and sticks in his useless son to milk the system.
Progress...
Well the father is an absolute chancer who holds onto a lot of his money by sticking people and not paying them by all accounts. That's a whole different story though!
5.5% loan for land. You won't make the interest cost back on regular land easily by working it. You'd make the interest cost back and more on a hill farm with established entitlements at the National average (plus 25% top-up)0 -
Donald Trump wrote: »How do they work out stocking rates though? Would it not be on the entire land base?
A lad with 200 acres of dairy and beef in North Cork who buys a mountain farm of 100 acres of hill farm in West Cork probably has his stocking rate calculated over his entire "farm" and is already over minimum threshold. Might also bring him under nitrates limits as well by having the extra maps!
They don't do spot checks or monitoring of individual plots do they?
If it is hill ground and it isnt being grazed then it will be deemed ineligible. They are monitered via satellite so you wont get a notification, you will just get the results.
I know of two young farmers who bought hill ground a good 90 minutes from them and stocking it has been a disaster truth be told. Other people grazing it, sheep going missing in groups of 10, people dont take kindly to outsiders and they know that they wont be around every day. It is a nice handy spillover for them and that is the way they want to keep it. But it has to be stocked so their hands are tied.0 -
Deleted User wrote: »They do checks, they do walk commonages, and insist on GPS photographic evidence as well as the usual paper trail.
A few mountain blackfaces thrown onto it might leave enough of an impact for a chancer to plausibly try to claim it is being used if they do get inspected maybe?
I'm not suggesting anyone do anything illegal. I'm wondering if people do it. It's not relevant to my own situation anyway0 -
Donald Trump wrote: »A few mountain blackfaces thrown onto it might leave enough of an impact for a chancer to plausibly try to claim it is being used if they do get inspected maybe?
I'm not suggesting anyone do anything illegal. I'm wondering if people do it. It's not relevant to my own situation anyway
TBH they need to stay where they're supposed to be, not many ring fenced commonages around here at least. Add to that satellite imagery is now top notch, so they have access to where stock is and when via more than ground inspections.
I know a Cork man used to own shares in a commonage I'm on, to be fair to him he had a local man run the correct number of sheep on it too.0 -
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Deleted User wrote: »TBH they need to stay where they're supposed to be, not many ring fenced commonages around here at least. Add to that satellite imagery is now top notch, so they have access to where stock is and when via more than ground inspections.
I know a Cork man used to own shares in a commonage I'm on, to be fair to him he had a local man run the correct number of sheep on it too.
Ok, I was just wondering because we have land taken for silage for example. So we don't run any stock on it. Some is up to about 8 miles away. Nobody comes and asks us to justify what animal was on it and when. They would be able to tell there was silage taken off it if they wanted to. Maybe they pay more attention to the hill farms for those checks.
We had a bit of rough ground taken at one stage for grazing and the Teagasc man did say to make sure it was used because if they came out and checked it and didn't see any evidence of use - even shite on the ground - it might be deducted from the area submitted. The reason it was rough was that it was beside an area that had had some industrial units put up and that field seemed to have been used as a dumping ground for clay etc. And scrub had grown up through it.0 -
Donald Trump wrote: »Ok, I was just wondering because we have land taken for silage for example. So we don't run any stock on it. Some is up to about 8 miles away. Nobody comes and asks us to justify what animal was on it and when. They would be able to tell there was silage taken off it if they wanted to. Maybe they pay more attention to the hill farms for those checks.
We had a bit of rough ground taken at one stage for grazing and the Teagasc man did say to make sure it was used because if they came out and checked it and didn't see any evidence of use - even shite on the ground - it might be deducted from the area submitted. The reason it was rough was that it was beside an area that had had some industrial units put up and that field seemed to have been used as a dumping ground for clay etc. And scrub had grown up through it.
Yeah here they look obvs for livestock on the ground, that the land is or has been grazed, evidence such as dung and stock paths through the land.
I don't know what the story is for lowland/silage ground as I only see it when I travel :pac:0 -
Deleted User wrote: »To add a further bit of realism.
I'm assuming the 557ac farm in one block is private hill rather than commonage so a minus in schemes like GLAS for example is a significantly lower payment rate, and coming to today that farm is excluded from REAP as I'd bet my left nut there's heather, and unwanted in Organics on points.
I'd guess it's also got some level of designations attached? Possibly multiple designations and if by some stroke of fortune not, I'd think the chances of it being designated this decade are very high.
Land type is the next pitfall, the apartheid GAEC2 regs would apply which could reduce or eliminate agriculture activities depending on regulation wordings, so there's that to keep the owner awake at night. Also any designations would seriously hamper any diversification or improvement efforts including every day things like fencing, drainage and even type of animal grazed.
While €24k+ BPS isn't to be sneezed at, that farm isn't the goose that lays the golden egg some may think it to be. It potentially has some extreme limiting factors existing and worry some challenges to overcome in the future.
Agree 100% but a lot of people don't see the pitfalls just look at the BP etc . Most definitely don't think of the tax man0 -
Agree 100% but a lot of people don't see the pitfalls just look at the BP etc . Most definitely don't think of the tax man
You'll pay tax on income regardless. If you buy that 557 acres and house and draw your 24,170 and work it to a minimum level so that it breaks even then you'll still have 24,170 to pay tax on
If you go off elsewhere and buy a cottage on 35 acres for 700k and work it and clear a profit (including any BPS) of 690 per acre then you'll also have to pay tax on roughly the same amount (24,150).
The BPS for the former is probably likely to increase with full convergence? Or am I wrong in assuming that? It would currently be around 107 per hectare. If it went up 50% to 160, then the other fella has to clear over 1k per acre to match him.
I'm not saying it's so simple. But it might suit some people. I'm not saying I'd buy it myself.0 -
Donald Trump wrote: »with full convergence
The council of ministers want 75% convergence.
Parliament want 85% convergence.
There's no full convergence on the table.0 -
Deleted User wrote: »The council of ministers want 75% convergence.
Parliament want 85% convergence.
There's no full convergence on the table.
A new entrant who successfully applies to the national reserve will get those entitlements brought up to the national average. No? And if it is naked land will get entitlements on it at that average. It just can't be land that was made "naked" to take advantage of that as a loophole0 -
Deleted User wrote: »The council of ministers want 75% convergence.
Parliament want 85% convergence.
There's no full convergence on the table.
My apologies, it is the position of the parliament to look for 100% convergence. I had thought they were seeking 85% but that isn't the case.Donald Trump wrote: »A new entrant who successfully applies to the national reserve will get those entitlements brought up to the national average. No? And if it is naked land will get entitlements on it at that average. It just can't be land that was made "naked" to take advantage of that as a loophole
True. I know the dept have rejected lease agreements where a farmer sold his entitlements for the purpose of leasing to a young farmer to draw down higher entitlements and pass some of that back to the landowner, so there is precedent against it.0 -
Haven’t bought the Journal but see they have a feature about CAP this week.....among the headlines it’s says ‘Scrub may be deemed eligible to qualify for payments’
Has anyone read this feature yet?
A lot of farmers with ‘rough’ land have been penalised for having scrub or rough ground over last few years.....are they going reversing this process somewhat or is that too much to hope for?0 -
In a meeting tonight between the Minister for Ag and all farm lobby groups, all groups except INHFA spoke against front loading. It's also unfortunate as it may be a sign of national direction that our minister is looking for front loading (CRISS) to be voluntary for member states.
Removing the front loading option would see more pain inflicted on those on a small number of hectares who will see cuts from convergence. The only hope it seems is if in the negotiations the EU ignore our ministers position on front loading and make it mandatory across member states.0 -
Do we know the figures of what the front loading would mean?
Say how much for the front loaded hectares, which is how many hectares?
And how much would that leave for above those front loaded hectares?
We really never really know what does be lobbied for at these meetings. Thanks for the heads up herdquitter.0 -
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Say my name wrote: »Do we know the figures of what the front loading would mean?
Say how much for the front loaded hectares, which is how many hectares?
And how much would that leave for above those front loaded hectares?
We really never really know what does be lobbied for at these meetings. Thanks for the heads up herdquitter.
Yep, intentionally negotiations are kept as cloudy as a mud bath at night so people can be sold a pup afterwards. Control of information is control of money.
I know INHFA proposed front loading be applied to the first 10-15 hectares, every farmer would receive this. All other farm groups argued against FL, which is contrary to some positions saying low hectare/high ent value farmers will be hit worst. They obvs don't give a **** about them.
On the /HA figure, I'll have to check my notes from the meeting.0 -
[Deleted User] wrote: »In a meeting tonight between the Minister for Ag and all farm lobby groups, all groups except INHFA spoke against front loading. It's also unfortunate as it may be a sign of national direction that our minister is looking for front loading (CRISS) to be voluntary for member states.
Removing the front loading option would see more pain inflicted on those on a small number of hectares who will see cuts from convergence. The only hope it seems is if in the negotiations the EU ignore our ministers position on front loading and make it mandatory across member states.
Not if our minister has the balls to use his veto0 -
Deleted User wrote: »Re the article, it's always good to hear from the shouty IT'S MY MONEY brigade :rolleyes:
While I remember it.... Something the guy in the article should realise.
Irelands average cap payment is in or around €260/ha, which just happens to be in or around the European average payment.
Who cares? I hear from the crowd........
It's important because if we today had the magic money tree situation of upward only convergence argued for by some (a position never grounded in reality and never on the table) and if Ireland had above average payments then we would be in the same position as Germany, The Netherlands, and Malta. That is we would be transferring some of out national CAP % to other states.
Those farmers on low value entitlements have saved high entitlement holders from that by bringing down the national average, due to the shockingly unfair way sfp was constructed in the beginning.0 -
newholland mad wrote: »Not if our minister has the balls to use his veto
Good luck to him, there's zero appetite in other member states to draw this out further. So use the veto and it's likely he'll come back a second time with a lesser position.0 -
Deleted User wrote: »While I remember it.... Something the guy in the article should realise.
Irelands average cap payment is in or around €260/ha, which just happens to be in or around the European average payment.
Who cares? I hear from the crowd........
It's important because if we today had the magic money tree situation of upward only convergence argued for by some (a position never grounded in reality and never on the table) and if Ireland had above average payments then we would be in the same position as Germany, The Netherlands, and Malta. That is we would be transferring some of out national CAP % to other states.
Those farmers on low value entitlements have saved high entitlement holders from that by bringing down the national average, due to the shockingly unfair way sfp was constructed in the beginning.
Thanks for all the updates, I presume if front loading happens, it will be at the current average rate?0 -
Say my name wrote: »Do we know the figures of what the front loading would mean?
Say how much for the front loaded hectares, which is how many hectares?
And how much would that leave for above those front loaded hectares?
We really never really know what does be lobbied for at these meetings. Thanks for the heads up herdquitter.Thanks for all the updates, I presume if front loading happens, it will be at the current average rate?
You're welcome, and I apologise for any errors I've made or might make.
Really all I can tell ye about front loading as of now is our Minister and other farm groups appear to be against it, that the best chance of it coming in is the EU imposing it on all member states, OR unlikely, our Minister advocating for a voluntary member state adoption position, then choosing to implement it.
On front loading payment rates, INHFA have proposed that the first 15 hectares of every farm should be front loaded. The funding for this should be 10% of the Pillar 1 budget, which would deliver an €80/ha TOP UP bringing the value of the first 15 hectares entitlements to over €300/ha (most accurate figure I have).
I suppose then hectares beyond that would be at the mercy of ones starting position, convergence, eco schemes etc and so forth, that sort of calculation is just beyond my pay grade.
Farmers who feel this would benefit them really need to rattle their politicians on it, because of three things- Our minister appears against it
- All other farm groups are against it
- DAFM have done 0 modelling on front loading, indicating they aren't looking at using it
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[Deleted User] wrote: »Good luck to him, there's zero appetite in other member states to draw this out further. So use the veto and it's likely he'll come back a second time with a lesser position.
That's exactly when you at least use the threaten to use it even if you're no intentions. He'd surely have questions to answer if he voted against the expressed views of several lobby groups from his home country whom he met only hours previously.0 -
newholland mad wrote: »That's exactly when you at least use the threaten to use it even if you're no intentions. He'd surely have questions to answer if he voted against the expressed views of several lobby groups from his home country whom he met only hours previously.
He'll have questions to answer if he votes against the exact group of farmers, small hectares with higher historical payments, that those same group have built a lot of their poor arguments around.0 -
Bleating Lamb wrote: »Haven’t bought the Journal but see they have a feature about CAP this week.....among the headlines it’s says ‘Scrub may be deemed eligible to qualify for payments’
Has anyone read this feature yet?
A lot of farmers with ‘rough’ land have been penalised for having scrub or rough ground over last few years.....are they going reversing this process somewhat or is that too much to hope for?
Saw it I think. They said up to 30% of a parcel may be scrub0 -
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Seems a bit thick to be penalising lads for having scrub and at the same time forcing others to plant, or at least not touch, stuff for biodiversity reasons
All Irish farmers should be getting credit from EU for hedgerows. At least be able to count them towards something!0
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