UK farmers will lose more than £90 million in basic payments this year due to the strength of the pound.
The mechanism used by the EU to convert Basic Payments Scheme (BPS) payments into sterling uses an average of the euro-pound exchange rate through September.
BPS payments for England are set in Euros and then converted into sterling and the rate, an average of the European Central Bank exchange rates set in September, will be €1=£0.73129.
Since last year’s payment, the pound has strengthened as the UK economy continues to improve while concerns remain about recovery in the eurozone, this will hit UK farm payments.
Defra estimated the payment rates for 2015 should be in the region of €70.00 per hectare in moorland and €244.00 per hectare in the rest of SDA and non-SDA.
The RPA to publish the entitlement values, greening rates and young farmer payment rates in November, according to the NFU.
Anand Dossa, economist at the NFU, said: “The exchange rate for calculating 2014 support payments was the lowest in seven years. Since September last year, the time when the support payments were set, the pound has strengthened further, rising by 6.1 per cent.”
Graham Redman, partner and research economist at Andersons, said: “Farmers will notice quite a difference. The amount of money per hectare in euro terms is coming down. There is also a slide in the value of the basic payment scheme demonstrated in sterling.”
But the pound’s value compared to the euro has dropped since August and Mr Redman said farmers would now be better off than if the BPS exchange rate was set last month.
AHDB Beef and Lamb also warned farmers about the impact of September’s exchange rate on farm payments.
Additionally, the UK industry faces the prospect of some farmers receiving payments later than usual.
The Rural Payments Agency reassured farmers in September it was on track to meeting its payment target in England. Most farmers were likely to be paid in December, but industry chiefs warned farmers to prepare for the possibility of receiving payments late.
Mr Redman said: “Instead of 99 per cent of payments on day one, it could be 90 per cent in month one. Farmers just need to be prepared.”
2014 €1 = £0.77730
2013 €1 = £0.83605
2012 €1 = £0.79805
2011 €1 = £0.86665
2010 €1 = £0.85995
2009 €1 = £0.90930
2008 €1 = £0.79030
2007 €1 = £0.69680
2006 €1 = £0.67770
2005 €1 = £0.68195