Euro crisis threat to farm subsidies

The burgeoning euro crisis and Greece’s uncertain political future threatens to have an unprecedented effect on UK agriculture.

Subsidy payments calculated in euros could plummet if Greece abandons the euro and the single currency collapses.

“This could break into a full scale crisis at any moment,” CLA president William Worsley told the Northern Farming Conference on Thursday (3 November).

“We should be really worried about this. What happens if the people of Greece vote against the bail out deal?”

The repercussions for the agricultural and land-based sector were not completely clear, Mr Worsley told 300 delegates at the Hardwick Hall Hotel, Sedgefield.

“Farmers’ joy or misery in the last two decades has closely followed the euro-pound exchange rate.”

“For the euro to fall significantly against the pound or dollar means that the Eurozone is disproportionately affected by the developments.

“It could happen.”

British banks, national finances and the economy were highly exposed to a Eurozone collapse and US finances were as precarious as on this side of the Atlantic, said Mr Worsley.

Farmers had been cushioned in some ways from the worst effects of the recession, he added. But that could all change.

Banks appeared to be lending to landowners who had assets against which to borrow, Mr Worsley acknowledged.

Farmers also had a guaranteed income – for the time being at least – in the form of the single payment, which was paid in euros.

But Mr Worsley warned: “There is therefore some currency risk.”

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