By Philip Clarke, Europe editor
NFU president Ben Gill has written to farm minister Jack Cunningham, pressing for farmers to be allowed to receive their subsidies in Euros.
New agrimoney proposals, released in Brussels last week, give countries not joining the single currency in 1999 the option to pay direct income aids in either their national currency or in Euros.
But the Government will also have to ensure that producers receiving aid in Euros do not get more support than those taking their money in sterling.
Such a situation could happen if the Pound weakens between the time area aid payments are set in Sterling on 1 July and the date when the money is actually received. That is usually in October or November.
This would appear to make it quite difficult for farmers to actually be paid in Euros and Mr Gill has pressed Dr Cunningham to find a solution. Chancellor Gordon Brown last year promised to do all he could to enable people to work in Euros.
According to NFU chief economist Sion Roberts, there are several advantages for farmers to receive payment in Euros. In particular, it will enable them to buy inputs elsewhere on the continent more cheaply, without the cost of transferring currency.
It will also make it easier for farmers to borrow in Euros. “At 7.5%, interest rates in the UK are double the levels in the Euro-zone,” said Mr Roberts. “Receiving subsidies in euros will allow farmers to service any Euro-debt without the risk of sterling devaluing and pushing up the cost of repayments.”
For this and other stories, see Farmers Weekly, 19-25 June, 1998