A favourable exchange rate means this year’s Single Farm Payment will be worth more than last year for most farmers, it has been announced.

Payments under the Single Payment Scheme and other EU direct aid schemes are converted from euros to sterling using the European Central Bank rate on 30 September, or nearest working day. The Rural Payments Agency yesterday confirmed that rate was €1= £0.79030, compared with €1 = £0.69680 in 2007.

That effectively means a €270 entitlement will give £213/ha before modulation, equivalent to a 13% increase on last year’s £188/ha, according to Savills’s Robert Hall. Varying rates of national modulation (see table below) will nullify some of the gains, but overall it will offer farmers a small token of compensation, in what is otherwise a gloomy economic outlook, he said.

“Obviously these benefits are small when put into context of the practical problems facing farmers; including the wet harvest, extra grain drying and saturated seedbeds, especially when combined with the deepening economic gloom affecting cereal prices, with feed wheat for the majority of this trading year back to under £100/tonne”.

Stewart Wood, NFU Scotland Vice-President, added: “After what seems to be a great deal of bad news, the exchange rate announced for the 2008 single farm payment represents some welcome good news as it means a higher payment than last year which just covers the current rate of modulation.

“Therefore, in real terms farmers should have more in their pockets. But we mustn’t get complacent. In my view this is just a lucky consequence of currency fluctuations and we’re unlikely to see the same again.

“In addition, if input costs continue to rise and farmgate prices do not, then any benefit of the 13% increase will be entirely swallowed up.”