Entitlements

Tomjim

Looking to buy some entitlements. My hope would be to purchase 12 at a value of €500 each.

Apparently I could pay up to 2 times their value. Other than the agents on IFJ anyone know any others, also any advice/ wisdom would be greatly appreciated.

adne

I dont understand the entitlements fully.

Can someone explain?
Where is the profit to be made?

aidanki

v interested in this too

Pique

adne wrote: »

I dont understand the entitlements fully.

Can someone explain?
Where is the profit to be made?

Entitlements valued at €350 ea.
35 of 'em = €12,250.

Multiplier of 1.4 (conservative apparently, according to this article) brings the PURCHASE PRICE to around €17150.

But the buyer gets the entitlements for 2 years, so they are worth 24.5k, or a profit of €7350 in just 2 years.

Not bad.

Now with the scheme extended to 4 years, the price goes up from 1.4x to 1.8x (say) the face value of the entitlements (€22050) while over the 4 years remaining, the entitlements are worth €49000, or a €27000 profit in 4 years.

Try to get a bank to give you that return on your investment.


Or am I missing something ?

aidanki

confirmation of SFP scheme referenced in that article, what does that mean, has there been some announcement that i missed

if the above is correct thats money for jam, and you could borrow the money and still make a profit

adne

Pique wrote: »

Entitlements valued at €350 ea.
35 of 'em = €12,250.

Multiplier of 1.4 (conservative apparently, according to this article) brings the PURCHASE PRICE to around €17150.

But the buyer gets the entitlements for 2 years, so they are worth 24.5k, or a profit of €7350 in just 2 years.

Not bad.

Now with the scheme extended to 4 years, the price goes up from 1.4x to 1.8x (say) the face value of the entitlements (€22050) while over the 4 years remaining, the entitlements are worth €49000, or a €27000 profit in 4 years.

Try to get a bank to give you that return on your investment.


Or am I missing something ?

If this is the case why dont people borrow money to buy entitlements.
There must be more to it, is there a limit to the amount of entitlements you can hold based on your stock numbers?
How is this paid out - through the SFP?

reilig

adne wrote: »

If this is the case why dont people borrow money to buy entitlements.
There must be more to it, is there a limit to the amount of entitlements you can hold based on your stock numbers?
How is this paid out - through the SFP?

Yes, You have to have land that doesn't have entitlements in order to be able to buy entitlements.

For example: Farmer a has 9 hectares. His entitlements for the 9 hectares are €3000 or €333 per hectare or entitlement. He leases an extra 5 hectares of land with no enitilements. He can go out and buy up to 5 entitlements at any value per unit that he wants and claim them as part of his SFP.

Maybe I'm wrong, but I understood that this is how it works.

Rovi

Yep, the purchaser of Entitlements needs to have land (owned or rented) on which to claim on those Entitlements.

reilig

Rovi wrote: »

Yep, the purchaser of Entitlements needs to have land (owned or rented) on which to claim on those Entitlements.

Was I right in saying that its 1 entitlement per hectare?

ellewood

Pique wrote: »

Entitlements valued at €350 ea.
35 of 'em = €12,250.

Multiplier of 1.4 (conservative apparently, according to this article) brings the PURCHASE PRICE to around €17150.

But the buyer gets the entitlements for 2 years, so they are worth 24.5k, or a profit of €7350 in just 2 years.

Not bad.

Now with the scheme extended to 4 years, the price goes up from 1.4x to 1.8x (say) the face value of the entitlements (€22050) while over the 4 years remaining, the entitlements are worth €49000, or a €27000 profit in 4 years.

Try to get a bank to give you that return on your investment.


Or am I missing something ?

is it not

35 x 350 at 1.8 times at the moment which is 22050 plus commision of 3% plus vat of is around 1100 givng a total cost 23 200

yearly
35x350 is 12 250 less 10% modulation of anything over 5000 leaves you with 11500 a year income

11500 x3 gives you 34K

profit over 3 yer of 11K or 3600/year

so if you had to borrow for it cost over 3 yrs 27000 or 1200 interest a year you are now down to E2400 profit over all costs or E70/hec

Also is there only 3 years left even with the extra year 2011, 2012, plus the extra 2013

Rovi

I'm no expert on this stuff, but that's my understanding of it.
1 Entitlement may be used to claim on 1 Hectare.

Low-value Entitlements may be consolidated together onto a lesser number of Hectares, but there are a lot of restrictions on when and how often this can be done, and 'ridiculous' consolidations won't be allowed (ie.: trying to consolidate 10 Entitlements worth €300 each into 1 Entitlement worth €3000).

leg wax

if you have sold your entitlements and the dept come in to your farm how can they go about fineing you for breaking regulations as in nitrates, would they have to pursue you thru the courts or how would they do it, i have never heard of this happening they always threaten your single farm payment,well i dont have one feck off,after buying them you would want to have things in order for when they call to the gate or it would be a waste of money but then if you took into calculations the % fine that you could face would it still pay regardless.

reilig

leg wax wrote: »

if you have sold your entitlements and the dept come in to your farm how can they go about fineing you for breaking regulations as in nitrates, would they have to pursue you thru the courts or how would they do it, i have never heard of this happening they always threaten your single farm payment,well i dont have one feck off,after buying them you would want to have things in order for when they call to the gate or it would be a waste of money but then if you took into calculations the % fine that you could face would it still pay regardless.

They could reduce it from your Disadvantaged Area payment or REPS or AEOS payments. If they bring you to court they could take your herd or flock number from you which would mean that you couldn't keep any animals. They could set any fine against future payments that you may apply for.

If its a nitrates thing, won't it be from your Local authority? If they bring you to court, you'll simply get a fine. If you don't pay it you could become a hotel guest of the state

leg wax

reilig wrote: »

They could reduce it from your Disadvantaged Area payment or REPS or AEOS payments. If they bring you to court they could take your herd or flock number from you which would mean that you couldn't keep any animals. They could set any fine against future payments that you may apply for.

If its a nitrates thing, won't it be from your Local authority? If they bring you to court, you'll simply get a fine. If you don't pay it you could become a hotel guest of the state

you dont have any of the above what happens, basic what i am saying will you appear on their radar as you are not claiming from the eu or the state.as for the local authority they cant afford to collect the house hold rubbish so they wont be worried about how many cows we or you have.how do the dept fine you has anyone heard has anyone been caught, we all hear of people being fined a % of single farm pay ment but if you have none what happens are these people been inspected.

Pique

ellewood wrote: »

is it not

35 x 350 at 1.8 times at the moment which is 22050 plus commision of 3% plus vat of is around 1100 givng a total cost 23 200

yearly
35x350 is 12 250 less 10% modulation of anything over 5000 leaves you with 11500 a year income

11500 x3 gives you 34K

profit over 3 yer of 11K or 3600/year

so if you had to borrow for it cost over 3 yrs 27000 or 1200 interest a year you are now down to E2400 profit over all costs or E70/hec

Also is there only 3 years left even with the extra year 2011, 2012, plus the extra 2013

Quote from the linked article
"The latest announcements have effectively doubled the number of years -- from two to four -- that payments will be made under the existing system. "
Why is commission charged ? This is auctioneers fees, yes ?
Is VAT applicable on entitlements transfer ?

Also, can you explain modulation to me ?
Is it a case of the first 5000 is untouchable, but the excess is reduced by 10% ?
Do the entitlements reduce year-on-year ?

In your example above, the amount of income over 4 years is 46000, leaving a profit of practically 100% over 4 years.

Still a bloody sweet deal, no ?

dryan

ellewood wrote: »

Also is there only 3 years left even with the extra year 2011, 2012, plus the extra 2013

According to this weeks journal, the existing scheme looks like it will be extended to 2014 as well - what ye think?

ellewood

Pique wrote: »

Quote from the linked article
"The latest announcements have effectively doubled the number of years -- from two to four -- that payments will be made under the existing system. "
Why is commission charged ? This is auctioneers fees, yes ?
Is VAT applicable on entitlements transfer ?

Also, can you explain modulation to me ?
Is it a case of the first 5000 is untouchable, but the excess is reduced by 10% ?
Do the entitlements reduce year-on-year ?

In your example above, the amount of income over 4 years is 46000, leaving a profit of practically 100% over 4 years.

Still a bloody sweet deal, no ?

Thanks, if its 4 years left to get paid then, thats better then.

Yea the commission is for the auctioneer and the vat is on commission/fees i dont think theres any vat charged on the actual entitlements.

i think modulation is on a sliding scale with the top being 10% on anything over 5K but im not sure on this.

I think income may be 46000 but profit wouldnt be but maybe im wrong im sure if it was thered be a q to buy them

reilig

leg wax wrote: »

you dont have any of the above what happens, basic what i am saying will you appear on their radar as you are not claiming from the eu or the state.as for the local authority they cant afford to collect the house hold rubbish so they wont be worried about how many cows we or you have.how do the dept fine you has anyone heard has anyone been caught, we all hear of people being fined a % of single farm pay ment but if you have none what happens are these people been inspected.

If you've no herd number or flock number then you won't be keeping any animals so you won't have a problem with nitrates.

If you have a leaking septic tank on your house site and it is reported or inspected, your local authority won't be long sending you a warning letter which if unpaid will lead to a court appearance and a fine. They will do the same for failing to meet the Nitrate Regulations (if you are caught).

I know someone who claimed over €30k in REPS 3. He never did a tap of work for it. He was inspected in year 5 and had to pay back the whole amount. They didn't stop his SFP. He went to court to contest having to pay back the REPS money and lost his case. He is now paying it back in installments of €50 per week. The same man had his animals taken off him by the DVO for cruelty a year later. A complete messer!!!

JohnBoy

The highest rate of repeat offenders in farm inspections are seemingly the people with the smallest single farm payments. I dont know what happens if you've no SFP to beat you with, but for small people they just get a % deducted from their already small SFP.

Min

dryan wrote: »

According to this weeks journal, the existing scheme looks like it will be extended to 2014 as well - what ye think?

Suits the IFA top brass and others who farmed the system.

reilig

Min wrote: »

Suits the IFA top brass and others who farmed the system.

Really the only people that it doesn't suit are those who currently have no SFP. Sadly this group includes new entrants into Farming and it makes the system unfair for them.

I also don't agree that the Likes of larry Goodman should receive €5 million in a SFP based on cattle that were bought by him or his agents in marts and slaughtered in his factory (calculated on slaughter premiums) and not actually farmed on his land at all.

At the time, it was the fairest system possible and all suggestions are that the next methos of dividing out the SFP post 2014 will be something similar.

rancher

Min wrote: »

Suits the IFA top brass and others who farmed the system.

Nothing to do with IFA, anyone who didn't maximise their entitlements through the 1990s wasn't farming for profit

Min

rancher wrote: »

Nothing to do with IFA, anyone who didn't maximise their entitlements through the 1990s wasn't farming for profit

Well, I am fed up listening to John Bryan wanting no change, maybe his farming system wouldn't be worth €60,000 a year now.

As reilig says the current system doesn't suit some, it didn't suit me as I wasn't long into farming. However I have always made profits.

rancher

Min wrote: »

Well, I am fed up listening to John Bryan wanting no change, maybe his farming system wouldn't be worth €60,000 a year now.

As reilig says the current system doesn't suit some, it didn't suit me as I wasn't long into farming. However I have always made profits.

European schemes have always been the same, they draw up a scheme, set a date in the past and you are where you are, just luck !!!!!!. Look at milk quotas, lasted 30 years, based on early eighties, a whole generation of farmers barred from the most profitable enterprise.

benjydagg

Modulation is a type of tax, to provide a fund for new applicants.
The first €5000 is untouched, the balance is subject to modulation.
The entitlements do not reduce, but the modulation may increase.
Vat is charged ONLY on transactions over €37500 in value.
Commision is paid to the auctioneer, if you do not use an auctioneer, you run the risk of buying a useless piece of paper with no comeback IF the seller is a dodge.

Pique wrote: »

Quote from the linked article
"The latest announcements have effectively doubled the number of years -- from two to four -- that payments will be made under the existing system. "
Why is commission charged ? This is auctioneers fees, yes ?
Is VAT applicable on entitlements transfer ?

Also, can you explain modulation to me ?
Is it a case of the first 5000 is untouchable, but the excess is reduced by 10% ?
Do the entitlements reduce year-on-year ?

In your example above, the amount of income over 4 years is 46000, leaving a profit of practically 100% over 4 years.

Still a bloody sweet deal, no ?

benjydagg

This is why the rental market is on fire at the moment. People who have invested in entitlements of say €800/ha can afford to give €200/acre to rent land and still make a profit of €100/ac, by simply keeping the land in good agricultural and environmental condition.

Pique wrote: »

Entitlements valued at €350 ea.
35 of 'em = €12,250.

Multiplier of 1.4 (conservative apparently, according to this article) brings the PURCHASE PRICE to around €17150.

But the buyer gets the entitlements for 2 years, so they are worth 24.5k, or a profit of €7350 in just 2 years.

Not bad.

Now with the scheme extended to 4 years, the price goes up from 1.4x to 1.8x (say) the face value of the entitlements (€22050) while over the 4 years remaining, the entitlements are worth €49000, or a €27000 profit in 4 years.

Try to get a bank to give you that return on your investment.


Or am I missing something ?

benjydagg

New entrants can avail of FREE entitlements. Just ask the Dept.
:P

reilig wrote: »

Really the only people that it doesn't suit are those who currently have no SFP. Sadly this group includes new entrants into Farming and it makes the system unfair for them.

I also don't agree that the Likes of larry Goodman should receive €5 million in a SFP based on cattle that were bought by him or his agents in marts and slaughtered in his factory (calculated on slaughter premiums) and not actually farmed on his land at all.

At the time, it was the fairest system possible and all suggestions are that the next methos of dividing out the SFP post 2014 will be something similar.

aidanki

benjydagg wrote: »

New entrants can avail of FREE entitlements. Just ask the Dept.
:P

you serious about that or just joking?

benjydagg

Of course I am serious. That is what modulation is for. You will need to qualify by having relevent educational training, this can be done through Teagasc part-time. You will need to get a herdnumber, these are available also. Feel free to contact me.

aidanki wrote: »

you serious about that or just joking?

reilig

benjydagg wrote: »

New entrants can avail of FREE entitlements. Just ask the Dept.
:P

yes,

But the demand far outstrips the supply. Its like a lottery. I know loads of people who have applied and I know 1 person who was successful in obtaining entitlements - 3 that were valued at €190 each. Better than nothing I suppose.

ellewood

reilig wrote: »

yes,

But the demand far outstrips the supply. Its like a lottery. I know loads of people who have applied and I know 1 person who was successful in obtaining entitlements - 3 that were valued at €190 each. Better than nothing I suppose.

+ 1 on that ive been trying them since 2008 and eventually got a few small ones off them but as rellig said better than nothing

benjydagg

I didn't know there were so many new entrants looking for the entitlements!
The cost of buying is going through the roof at the moment. Remember, the most important thing to calculate is can you farm in a year and not lose money. If you can, then the single farm payment is your profit. Don't use the SFP to prop up borrowings, please.;)

ellewood wrote: »

+ 1 on that ive been trying them since 2008 and eventually got a few small ones off them but as rellig said better than nothing

leg wax

benjydagg wrote: »

I didn't know there were so many new entrants looking for the entitlements!
The cost of buying is going through the roof at the moment. Remember, the most important thing to calculate is can you farm in a year and not lose money. If you can, then the single farm payment is your profit. Don't use the SFP to prop up borrowings, please.;)

but that is what they are doing just look back over threads ,anyone get the sfp have bills to pay , santa wont be comeing and so on,i think thats its even worse to use the sfp and put it into the farm, than the guy who works part time and puts his wages into it.i wish the sfp was gone and it would stop the prolonged agony of poor farmers and their systems and before anyone says anything my 35 acres will not survive either but i think that its for the better good of farming.

benjydagg

This should be framed and sent to all Irish polititions. Well said leg wax.

leg wax wrote: »

but that is what they are doing just look back over threads ,anyone get the sfp have bills to pay , santa wont be comeing and so on,i think thats its even worse to use the sfp and put it into the farm, than the guy who works part time and puts his wages into it.i wish the sfp was gone and it would stop the prolonged agony of poor farmers and their systems and before anyone says anything my 35 acres will not survive either but i think that its for the better good of farming.

reilig

leg wax wrote: »

but that is what they are doing just look back over threads ,anyone get the sfp have bills to pay , santa wont be comeing and so on,i think thats its even worse to use the sfp and put it into the farm, than the guy who works part time and puts his wages into it.i wish the sfp was gone and it would stop the prolonged agony of poor farmers and their systems and before anyone says anything my 35 acres will not survive either but i think that its for the better good of farming.

SFP is your profit. The tax man won't accept santa receipts - so if you do spent your SFP on santa, then its your profit (or drawings) that you are spending.

I do agree with ye. Over 50% of farms in ireland are showing a loss on an annual basis and this includes their SFP. many of these are arranged losses so that people don't have to pay tax but a certain amount are down to bad farming practices which sees farmers spend their SFP just to keep the farm going.

I was probably one of those people last year who complained about not getting my SFP on time. The thing is, the SFP comes at the end of the year and I had bills to pay. I had borrowed money earlier in the year from the farm a/c to buy a car and to make one of the repayments to the mortgage. In the middle of the year, the household account was raided to pay for the fertilizer. At the end of the, I owed a few euro here and there and I was relying on the SFP to cover it. When it didn't come, the money had to be found somewhere else. It doesn't mean that I spent my SFP on the farm.

Would be happy enough to see the end of the SFP too if it meant that those who were making a loss on their farm no longer had the SFP to prop them up - which would mean that the food that we produce would be sold for at least the cost that cost us to produce it.

leg wax

i would call the sfp a taxable bonus you get if you want it or not.

Dozer1

Just wondering if anyone on here has sold entitlements and if there is anything I need to watch for.
Due to loosing rental ground I won't be able to use all mine so I was hoping to sell around 15 of them.

Rang one of the auctioneers in the IFJ a Brennan fella in New Ross and it seems pretty straight forward.

they're worth 106euro each so he was saying the going rate is 1.25 times the value.

dar31

Dozer1 wrote: »

Just wondering if anyone on here has sold entitlements and if there is anything I need to watch for.
Due to loosing rental ground I won't be able to use all mine so I was hoping to sell around 15 of them.

Rang one of the auctioneers in the IFJ a Brennan fella in New Ross and it seems pretty straight forward.

they're worth 106euro each so he was saying the going rate is 1.25 times the value.

can you not stack them

Dozer1

Being honest I know its what I should do but baby number one is on the way and busy at the day job so taking more land is not on the cards.

Easiest solution is to sell I think, only took over last year so got alot to sort out.

Losing them to the National Reserve is the only other option

Dozer1

Thanks Leg wax appreciate the warning, that's why I posted here to see what the pit falls were, I'm in limerick but most of the guys advertising in the IFJ were a long way away, there are 2 guys is Mallow, might give them a ring tomorrow to see what the story is with them

agcons

It does'nt matter where in the country you buy the entitlements from, apparently there are a lot more buyers than sellers at the moment. You will need 1 ha to claim each entitlement. The lower value ones are available at face value, the higher the value the higher the the price ratio. From an investment point of view therefor the lower value ones will give a higher return on investment. Assuming there are three years left then the max payment will be 3 times face value, minus the 10% modulation(if applicable), ie the payout will be 2.7, spread out over the next 3 years. Take off the cost of financing the purchase (bank loan or loss of interest if you have the cash) and you have an idea of what you can pay. Also need to bulid in an allowance for the risk of a penalty if you have an inspection. Of course if as is possible the SPS is still there in 2014 then they become even more valuable. Some buyers are also gambling that the post 2013 payments will be in some way related to a farmers existing entitlements while some sellers are gambling on this not happening and are collecting their money now rather than over the next 3/4 years.

agcons

Dozer1 wrote: »

Just wondering if anyone on here has sold entitlements and if there is anything I need to watch for.
Due to loosing rental ground I won't be able to use all mine so I was hoping to sell around 15 of them.

Rang one of the auctioneers in the IFJ a Brennan fella in New Ross and it seems pretty straight forward.

they're worth 106euro each so he was saying the going rate is 1.25 times the value.

If you still have enough land to claim 50% or more of them land you could stack on account of losing rented land

ellewood

is it true that you cant stack bought entitlements?

if you have owned and leased land is there any point buying entitlements for the leased land or would you be better off buying for the owned land only?

razor8

I have a 10 year lease on the land off my father which has entitlements and rent another farm on a 5 & half year lease with no entitlements

can i purchase entitlements for the 5 & half year lease and what obstacles am i likely to encounter??

benjydagg

Yes you can purchase entitlements for the rented land. No obstacles. Contact an auctioneer. An example is €479/ha entitlements are available from HGM entitlements @ 2.2 times their value, plus 3% fees, and 21% vat on fees. So 10 units would cost 479x2.2x1.03 plus vat on fees = approx €10920. You will collect 10x479 - 4790 minus modulation (9%) = €4358 x 2011/2012/2013. APPROX €13000. I AM NOT QUALIFIED TO GIVE ADVICE, SO THE ABOVE IS JUST A PERSONAL OPINION..:cool: TOTAL.QUOTE=razor8;71774003]I have a 10 year lease on the land off my father which has entitlements and rent another farm on a 5 & half year lease with no entitlements

can i purchase entitlements for the 5 & half year lease and what obstacles am i likely to encounter??[/QUOTE]

k mac

I am buying entitlements of 185 euro for 1.5 times there value. I thinh they are about the right price as there are not very good entitlements but there are not very bad either .I know the 100 euro ones are going face value

Dozer1

After checking with Teagasc I've gone with Helen McGee to sell mine anyway, mine are only 106 euro ones she reckons between 1.2 and 1.4 times the value

gav86

benjydagg wrote: »

Yes you can purchase entitlements for the rented land. No obstacles. Contact an auctioneer. An example is €479/ha entitlements are available from HGM entitlements @ 2.2 times their value, plus 3% fees, and 21% vat on fees. So 10 units would cost 479x2.2x1.03 plus vat on fees = approx €10920. You will collect 10x479 - 4790 minus modulation (9%) = €4358 x 2011/2012/2013. APPROX €13000. I AM NOT QUALIFIED TO GIVE ADVICE, SO THE ABOVE IS JUST A PERSONAL OPINION..:cool: TOTAL.QUOTE=razor8;71774003]I have a 10 year lease on the land off my father which has entitlements and rent another farm on a 5 & half year lease with no entitlements

can i purchase entitlements for the 5 & half year lease and what obstacles am i likely to encounter??

[/QUOTE]


No Modulation below €5,000.

razor8

after buying entitlements, nothing has changed on landholding since last year, im am doing my SFP application online, as the paperwork isnt back yet my advisor told me i will automatically get these in due course

but i see that i need to print a cover letter with appliaction if i have traded in these, what do i need to put on it??

raindodger

is it late or worthwhile to try and buy entitlements. just going to submit my application and see i have 66.17 hectares and 61 entitlements so held of.
If you buy can they be added on at a later stage

benjydagg

You can buy entitlements up to 16th. If you use a reputable firm such as HMG agri-entitlements Kells, they can do the paper work for you. 046 9241189. Ask for Helen or John.Tell them Andrew sent you. You could buy low value for face value. I bought €337 at twice their value. Don't get greedy, I would leave at least one HA without entitlement in case of any overclaim you might make.

raindodger wrote: »

is it late or worthwhile to try and buy entitlements. just going to submit my application and see i have 66.17 hectares and 61 entitlements so held of.
If you buy can they be added on at a later stage