Subsidy trading to get under way again
Aberdeen Press and Journal - 05 January 2008
The farm subsidy sales that have been branded an absurdity by Eurosceptics and which have been deeply questioned by UK politicians resume at Inverurie's Thainstone Centre later this month.
Aberdeen and Northern Marts reports strong interest in the sales which start again on January 18.
The trading of single farm payment entitlements have become an annual feature since the 2005 reforms to the Common Agricultural Policy awarded farmers subsidies based not on what they currently do but rather the average of the annual payment for what they did between 2000-2.
The system handed entitlements to retired farmers and pays out regardless of whether farmers grow crops or keep stock.
The real folly comes in that anyone who meets the European definition of a "farmer" can buy the subsidies, provided they have farm business reference and farm code numbers and access to the same area of land as the number of entitlements they hold.
That has resulted in thousands of acres of heather, scrub and rocky outcrops in Highlands and Islands being leased at peppercorn rents to a new breed of "farmers" - those who have either retired, stopped production or individuals wanting to make a fast buck courtesy of the taxpayer - to circumvent the rules and qualify for part of the payments which in Scotland in 2006 totalled £397.964million.
On the other hand new entrants to the industry get nothing, with a succession of initiatives failing them. The latest from the SNP government looks similarly set to hand over its cash to existing farmers and their families rather than genuine new entrants.
The trading regime was last year branded an absurdity by Open Europe, a Eurosceptic political think-tank which paid £429 at a Thainstone sale to buy 1.43 hectares of set-aside entitlements that will pay out £306.87 gross annually until 2013.
It then obtained land free gratis from a farmer to qualify for the payout and meet the rules of the regime. Its head of research, Paul Stephenson, said at the time that the lax definition of a farmer as simply someone who holds land to match the size of the payment entitlement they have was wrong.
There has since the sales started in 2006 been a frenetic trade for entitlements which have sold for up to 3.6 times their annual value. Much of the trade is among farmers themselves who are buying entitlements to boost their returns and who are similarly renting in land.
There is, however, increasing evidence that the entitlements are being bought by individuals who see the subsidies as a quick way to make cash by initially forking out what might be seen as a large sum to get back annual payments that over the next five years could potentially be worth significantly more than the initial capital outlay.
At least one City investor now admits to doing this. There are also a number of "hobby farmers" who have bought farms and kept the entitlements but who lease out the land to others to farm. Retired farmers would also fall into this category, using the payment to boost their pensions.
Aberdeen and Northern Marts last year sold more than 15,000 hectare units of entitlement by auction.
General manager John Gregor said: "I expect to see confidence in the market for single farm payment with the recent Cap 'health checks' reinforcing the payment system until 2013.
"Given the success of sales in the last couple of years, we anticipate strong interest in 2008."
Entries for the first sale close at noon on January 14.
© Aberdeen Press and Journal