Entitlement Trading: What it means for you

The new EU Common Agricultural Policy 2023-2027 regime has seen Basic Payment Scheme (BPS) Entitlements replaced by Basic Income Support for Sustainability (BISS) Entitlements. The Department of Agriculture, Food and Marine (DAFM) trading platform is now up and running for approved agents, so the market is just getting underway. MIKE BRADY reports

BPS/Greening Value - versus - BISS / CRISS / ECO Value Ireland’s 5th Nitrates Action Programme is the Basic Payment Scheme (BPS) Entitlements (including greening) of the old regime are replaced by three payments, namely Basic Income Support for Sustainability (BISS) Entitlements, ECO Schemes and Complementary Redistributive Income Support for Sustainability (CRISS). A farmer with 40 old BPS Entitlements, including greening, worth €10,800 will get a similar payment in the combination of BISS/ECO/CRISS in 2023. However, if the farmer decides to lease out the 40 entitlements the lease income will be considerably lower than in the old regime, because only the BISS element is leasable, not the ECO & CRISS. I expect lease payment to be 50-60% of the annual value. Owners (Lessors) of entitlements will have to accept lower annual lease incomes from entitlements.

Convergence

The new BISS will continue to be paid based on Payment Entitlements, with all values converging to 85% of the national average (expected to be approx. €135) by 2026. Convergence will result in high value entitlements being severely cut over the next 4 years.

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No clawback on selling entitlements in 2023 & 2024

The Department of Agriculture, Food and Marine (DAFM) has stated that there will be no clawback on the sale of entitlements in 2023 and 2024. However, as explained in leasing above, only the BISS value and not the ECO & CRISS elements are saleable. I predict entitlements will sell for between 2 and 2.5 times their annual BISS value. It is always important to calculate your net income after capital taxation when deciding to sell entitlements.

Transfer Confirmation

Signature Form DAFM are insisting the Transfer Confirmation Signature Forms must be witnessed by a solicitor or peace commissioner and not agents this year. It is alleged that in previous years, some unscrupulous agents transferred entitlements without the knowledge of the owners. While the number of cases reported are low, it is of significant concern to DAFM and they have reported the cases to the EU authorities, and where appropriate An Garda Siochana. In summary, 2023 and 2024 may be the time for those with surplus entitlements to sell them for once and for all. In my experience, every farmer’s individual situation is different, therefore it is vital to assess your options with an experienced consultant/advisor before any decisions are made in respect of the future of your BISS entitlements.

Mike Brady

Mike Brady is an Agricultural Consultant and Managing Director at Brady Group

Brady Group: Agricultural Consultants & Land Agents.

The Lodge, Lee Road, Cork.

Tel: 021- 45 45 120 email: mike@bradygroup.ie