impending departure from the EU. It’s almost a certainty that we will still have the current system during 2017 and 2018 and that would leave only 2019 and 2020 to continue with the present scheme until reform is scheduled anyway. Given the capacity of the Scottish Government’s IT infrastructure in place to deal with these payments, it is unlikely that Government would change to an entirely new system again within a two to three year window. This brings us back to the question of whether there will be any entitlement trading for the 2017 subsidy claim. Given that there is a fair prospect of another four payments under the current system (2017 to 2020), CKD Galbraith envisages producers will continue to actively look to trade as a result of this.
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The trading of entitlements for 2017 and beyond will certainly be available as a ready market should exist.
Purchasing entitlement, at say one and a
quarter times its face value, in order to receive possibly four payments in return would make financial sense for the majority of producers. Many producers who have acquired additional land feel it is advantageous to have that land covered with entitlement. This is often seen as akin to an insurance policy because the land is in the subsidy system, which potentially makes it eligible for whatever may come along post 2020. This rationale is also in the thought process of new farmers who are currently not claiming support. Only time will tell what transpires once Article 50 has been triggered and we have a clearer timeline for the UK’s withdrawal. The trading of entitlements for 2017 and beyond will certainly be available as a ready market should exist. As ever in this complicated area specialist subsidy planning advice should be taken.
colin.stewart@ckdgalbraith.co.uk 01738 448144
land depending on local interest. There is no one-size-fits-all approach. Within the same parish, we have seen multiple offers at very strong levels for some parcels of land, whilst other similar blocks of land have not sold for the target price or have even been withdrawn from sale. We understand this is also happening south of the border, where there has been an easing in prices and the market is patchy with some land not selling at all, depending on the particular buyers who are looking at that specific time.
Type of farms In general, some of the more marginal units have taken longer to sell due to lack of finance and also because livestock farmers have a requirement to sell their existing holding before buying another, due to the constraints of housing their stock. This can cause a delay in transactions. However, as the cost of borrowing money is comparatively very low, some livestock or dairy farmers have taken the view they can buy and
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We have seen multiple offers at very strong levels for some parcels of land, yet within a five-mile radius other similar types of land have not sold.
repay interest – and capital if accounts allow – cheaper than the cost of renting a similar type and quality of land on a fairly unsecured seasonal basis. Values for upland Less Favoured Areas/sheep holdings have been underpinned by forestry interests, providing the land is plantable. Arable land continues to be flexible as an investment with respect to contract farming agreements, but there remains a west-east shift of buyers looking for a much more forgiving type of holding. How much of the market is outside investordriven rather than driven by existing landowners and farmers? The farmland market is underpinned by existing landowners and farmers. The number of investors entering the market in the past 12 months has been limited.
duncan.barrie@ckdgalbraith.co.uk 01786 434620
www.ckdgalbraith.co.uk | Twitter: @CKDGRural | Rural Matters Autumn/Winter 2016 | Page 17