Currency values hit farm businesses as euro falls further

The impact of relative currency values on farm businesses is growing, with sterling close to a seven-year high against the euro.

Midweek, the euro was worth less than 71p, damaging the UK’s export prospects and encouraging further imports of competing foods and produce.

“The pound has been one of the best performing currencies of 2014,” said NFU economist Anand Dossa.

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The combination of a strengthening pound over the past year and the poor economic situation in the EU markets had resulted in subdued demand for UK products across the Continent, he said.

Currency mainly accounted for the drop of just over 7% in the value of last year’s single farm payment (SFP) compared with the 2013 value.

The euro has lost almost a further 9% since the exchange rate for SFP was set on 30 September 2014.

Euro-sterling exchange rates for SFP 

Year

Rate set by ECB

2009

0.90930

2010

0.85995

2011

0.86665

2012

0.79805

2013

0.83605

2014

0.77730

Rate on 27 May 2015

0.71

For the 2015 payment, the exchange rate will be set on an average of the value through the month of September.

However prospects for the euro mean the first Basic Scheme (BPS) payment is is likely to be lower in value than the 2014 SFP income.

Very few claimants were opting to take their BPS payment in euros, said agents this week.

Those who did receive their support payments in euros tended to be those who already had a euro bank account because they had previously taken loans in the currency, said consultant Philip Dunn of Brown & Co.

“There’s no feeling that the pound will weaken, and looking back we should all have fixed [the rate] when it was at 72, 73 or 74p, however, getting paid on time will be a bigger issue,” said Mr Dunn.

He added that export prospects were being wrecked by the strong pound while imports were being sucked in.

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