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BPS payments will rest on currency performance across September

The euro/pound exchange rate will be based on an average from across this month.


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UK farm support payments could be set using the lowest euro/pound exchange rate for eight years if currencies remain at their current levels.

 

Roddy McLean, agriculture director at Royal Bank of Scotland, said the Basic Payment Scheme euro/pound exchange rate would be based on an average from across September, whereas previously it had been based on the figure available on the last banking day of the month.

 

One euro currently converts to about 73p and, if this figure ended up being the average for the month, it would result in the lowest conversion rate since 2007 when one euro was worth 69p.

 

Mr McLean said: "By using an average for September it does smooth out some of the currency volatility we are experiencing.

 

"One euro is currently worth about 73p, which is 5.5 per cent down on last year (€1=77.3p), so there will be a fall in the value unless we see movement in the currency rate.

 

"Given all that is going on in Europe at the moment we do not know how it will go over the next 20-30 days. Because of everything which has been happening in Greece, it appears a lower exchange rate is something farmers will have to deal with and comes at a time when farmgate prices are low for many."

 

Further financial uncertainty is being added to the mix as many speculate on when the Bank of England might increase interest rates, with Mr McLean claiming it would happen in the ’not too distant future’, which might have implications for on-farm borrowing.

 

And he urged any farmers experiencing financial difficulties to come forward sooner rather than later.

 

"Eleventh hour options can be constrained," said Mr McLean. "If you are facing a cashflow issues do not bury your head in the sand because the earlier you speak to your bank the more flexibility there is when it comes to the options available."


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