Aberdeen and Northern Marts will hold its last sale of the season of Single Farm Payment entitlements on Friday, although private trading will still be possible until Monday, April 2.
The SFP was introduced in January 2005 as part of a radical overhaul of the Common Agricultural Policy that decoupled farm subsidies from production. The idea was to make farm production in the European Union more compliant with international requirements for less direct subsidisation. Instead of being paid a subsidy for every individual beef animal or ewe kept, or different rates for different crops harvested, farmers are now paid a lump sum once a year irrespective of what they produce.
The amount of SFP paid is unique to each farm as it is based on the subsidies that were historically paid to each business in selected years, called base years. Under Freedom of Information rules, the Scottish Executive publishes every farmer's SFP on its website, and some run to several hundred thousand pounds. SFP entitlements can be traded freely amongst registered farmers and that has led to the development of a healthy trade, particularly from large farms and estates selling off low-value entitlements and replacing them with more lucrative ones that pay more per hectare.
A loophole has been created that also allows any investor to become classified officially as a farmer and then buy the right to be paid these valuable annual EU subsidies. Classification is achieved by purchasing a registered smallholding, and then the investor simply rents in additional "bare acres" at a nominal £6 per acre in a paper exercise that allows a legitimate claim on unlimited amounts of acquired SFP entitlements.
That has led to unease in some quarters. Andrew Arbuckle MSP, the LibDem deputy spokesman on rural affairs, is one such critic. He has calculated that £100m of the £420m annual SFP pay-out in Scotland now goes to non-active farmers. He says: "I accept that the SFP is now the equivalent of a pension for many who are no longer actively involved in farming, and I have no problem with that. Unfortunately, the public believes that the SFP is supporting farming and helping it change to a market economy, and that concerns me". He concedes that the status quo is now established, and that politically there is no appetite to change the scheme, but he points out it is unfair to new entrants to farming.
EU Farm Commissioner Mariann Fischer Boel has also stated that the SFP will be around at least until 2013, and that has given the market confidence.
Standard SFPs have met a flying trade recently, with most selling for at least three times their established value to a top price of £2200 for 42.37 hectare units with an established value of e912.110 (£623) at an ANM auction in early March. In other words, those lucky enough to hold SFP worth £100,000 per annum have effectively been given a capital asset worth around one-third-of-a-million pounds.
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