Subsidy entitlements: the new farming commodity

THE reforms of the Common Agricultural Policy, agreed in 2003 and effective from 2005, saw support for the industry "decoupled" from production.

In essence farmers are now entitled to a single subsidy cheque each year, based on the level of support they received in the so-called reference years of 2000-2. Big money can be involved, and these entitlements are a tradable commodity.

Farmers looking towards retirement can cash in to a considerable extent while entrepreneurs seeking to expand their activities are willing buyers.

Ian Hope, of Hayes McCubbin Macfarlane, speaking from his office in Alyth, near Balirgowrie, said:

"The continued limited supply of entitlements against strong demand is fuelling the market. The majority of standard entitlement is trading at a multiplier of up to three times the annual value."

Hope concedes that this is a complex issue, especially with the vast majority of deals being struck in euros.

Current transfers are in the region of 250-350 per unit, but there have been some deals with values hitting up to 4,000 (£2,980) per unit.