BPS payments will be worth an estimated 16.54% more this year, following the fall in the value of the pound.
The official exchange rate used to convert payments from euros to sterling will be €1 = £0.85228, as set by the European Central Bank every 30 September.
The exchange rate will add about £350m to farmers’ direct payments, according to farm consultants Andersons, and will be used to covert English entitlement values, greening payments and young farmer payments.
“This exchange rate will boost payments to the industry at a time when it has endured significant impacts on farm gate prices and market volatility,” said NFU senior BPS adviser Richard Wordsworth.
“The increased payments will keep many businesses viable in the coming year as they are likely to experience input cost inflation.”
While a weaker pound had boosted exports, it had had a negative impact on production costs, as the prices of imported inputs, most notably energy, fertilisers and machinery, increased as the pound depreciated, he said.
“The key now is for the RPA to deliver the increased payments expected as promised to at least 90% of farmers before the end of the year – just three months away,” said Mr Wordsworth.
Final values of 2016 BPS payments will not be known until the end of November.
Entitlement and greening values will be recalculated in October/early November and the percentage to be deducted from payments for the EU’s agricultural crisis reserve will be announced in late November.
Currently it is proposed that 1.39% of each farmer’s’ BPS payment will be siphoned off into the reserve.
Most favourable exchange rate since 2011
The European Central Bank’s exchange rate will be the most favourable since 2011 when €1 was worth £0.86665. Last year, BPS payments were based on an exchange rate of €1 = £0.73129.
The value of the pound against the euro had been falling since the end of last year, but nose-dived after the UK’s vote to leave the EU on 23 June, and is still more than 7% lower than before the referendum result.
Euro exchange rates for BPS payments
- 2016 scheme €1 = £0.85228
- 2015 scheme €1 = £0.73129
- 2014 scheme €1 = £0.77730
- 2013 scheme €1 = £0.83605
- 2012 scheme €1 = £0.79805
- 2011 scheme €1 = £0.86665
- 2010 scheme €1 = £0.85995
- 2009 scheme €1 = £0.90930
- 2008 scheme €1 = £0.79030
- 2007 scheme €1 = £0.69680
- 2006 scheme €1 = £0.67770
- 2005 scheme €1 = £0.68195