Faster than a speeding bullet, DEFRA has put out a press release revealing the exchange rate at which this year's single farm payments will be converted from euros to sterling.
Confirming what the rest of the agricultural industry was talking about two weeks ago, farming minister Jim Fitzpatrick has declared that the conversion will be made at 90.93p/euro, securing farmers a 15% increase in their SFPs for 2009.
Important as this figure may be, perhaps a more newsworthy piece of information to come my way this week is the figure from the Rural Payments Agency confirming that as many as 1900 SFP claimants in England have elected to receive their subsidies in euros this year, rather than sterling.
That's three times as many as did so in 2008, suggesting there has been a reasonable uptake of the various schemes being touted by financiers in February and March to persuade farmers to pre-book their euros at the exchange rate prevailing earlier this year.
The figure still only amounts to less than 2% of the total number of SFP claimants in England, and is well short of the 7% who told an earlier survey they were going to pre-book their euros. But it shows a growing number of farmers are at least looking at ways of controlling their exposure to risk....
In the event, the actual rate used to convert SFPs to sterling for the vast majority of farmers is not that far removed from the rate secured by those who booked early - between 90p and 94p/euro in the main.
The question now is will they be tempted to lock into exchange rates early again in respect of their 2010 SFPs?
As was the case a nine months ago, that depends on whether they think sterling is going to weaken further against the euro in the next 12 months, (in which case, pre-booking at today's rate would be a mistake), or whether it will strengthen.
A case can be made for either scenario. Many pundits believe we are already seeing the green shoots of recovery, with banks back in profit, the stock market on an aggressive bull run and houses being snapped up with alacrity. Sterling will surely strengthen.
But others are more circumspect, pointing to the massive level of government debt which is set to cost UK households an estimated £3000 a year and rising levels of unemployment. Next year's general election adds to the uncertainty, making sterling a precarious destination for international investors.
Predicting currency is as dangerous as predicting commodity market. So perhaps it's best to stick with the guiding principle that, if the current rate or price provides a satisfactory return, then take it.
Meanwhile, farmers will be keen to get this year's SFP money as soon as possible. On this issue, Mr Fitzpatrick's statement confirms that "the RPA expects to at least match the performance under the 2008 scheme". So that's a relief.....
* For more blog postings click here. And why not sign up for regular email alerts?
Leave a comment
Want a user icon? Get a Gravatar!