Business

Single farm payment exchange rates confirmed

Monday 30 September 2013 16:44

British farmers will be receiving a single farm payment roughly the same size as last year, quashing fears of a drop in December's payment.

Farmers had been anticipating a fall of around 5% after the CAP budget was cut by 9% when heads of state agreed a smaller EU budget in February.

However, this will be compensated by today's (Monday 30 September) announcement, that the exchange rate for converting SFP from euros is 4.8% higher than last year.

The official European Central Bank rate for converting the 2013 SFP payment to pounds from euros was set at €1 to £0.83605, compared with last year's 0.79805.

This was positive news for farmers who were budgeting for a fall, but not as good as it could have been, as the pound has strengthened over the past few days said Richard King, head of research at The Andersons Centre.

"The pound had been consistently above 85p to the euro for most of the summer," he said.

"Sterling has actually strengthened slightly over the past few days which means a worse conversion rate for UK farmers than might have been the case," he added.

Those who had hedged their SFP in the summer would find they had "beaten the market" said Mr King but he warned against hedging for this reason and said he advised farmers to hedge to lock into an exchange rate they were happy with in order to manage risk.

Modulation rates in the UK for 2013 are unchanged compared to 2012 and the Welsh and Scottish payments can now be calculated - assuming confirmation of the proposed 4.98% cut to CAP known as financial discipline, which is being applied for the first time this year.

In England, a figure for the annual revaluation of entitlements is needed to fully calculate payments. The Rural Payments Agency usually releases this information, which depends on how many entitlements are claimed, in October.

Andersons estimates after modulation a typical lowland farmer in England would receive £205.90/ha compared with £209/ha in 2012.

The payment for severely disadvantaged area non-moorland is estimated at £164.40/ha compared with £168.26/ha in 2012 and Andersons estimates moorland payments at £29.20/ha, compared with £29.39/ha last year.

These figures are after 19% modulation deductions.

About 5% of farmers in the UK will be unaffected by the 30 September date as they choose to take their payments in euros.

The RPA has warned all farmers to ensure their bank details are correct to ensure all payments are made on time. Every year some claimants are subject to delays as they have failed to tell the RPA their bank details have changed.

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