Payments made to farmers under the 2017 Basic Payment Scheme are set to be almost five per cent higher than last year, owing to a more beneficial currency exchange rate.
The exchange rate for direct support payments via the European Union’s Common Agricultural Policy has been confirmed by the Rural Payments Agency as €1 being worth £0.89470, compared to £0.85228 in 2016.
The 4.98 per cent increase is a further improvement on the 16.54 per cent change claimants saw this time last year. In fact, the 2017 figure is the most favourable since 2009, when it topped 90p per euro, and it could see the BPS fund increase by some £82m.
A £25m portion of the uplift is as a result of using the average exchange rates for September as opposed to the spot rate set for the last day in September.
The settlement is a financial boost for farmers but it comes amid a long recovery. Many businesses have accrued debts over recent years due to a combination of factors, including flood damage, inaccurate and delayed payments in earlier BPS rounds and volatile market returns.
Richard Taylor, from the farming department in the Northallerton office of property agents Strutt & Parker, said: “While farm profitability has improved over the past 12 months, with a weaker pound leading to commodity price rises, farm incomes for many businesses are still way down on 2011/12 levels and levels of farm borrowing are also at an all-time high.
“At the start of the month it did look as if the confirmed exchange rate would be the highest we have ever seen by some margin. However, September has proven to be a changeable month in terms of currency, with hints of interest rises from the Bank of England causing sterling to strengthen against both the euro and the dollar.
“As it stands, farmers are looking at payments being about £10/ha higher in lowland areas and £9/ha higher on upland ground.”
Sally Horrocks, an associate at land, property and business consultancy George F. White, added: “This news will be an encouragement for farmers given the frustrating year for many with the stop-start weather. Farming profits look to be slightly higher than last year, mainly given the weaker pound aiding commodity prices, however, for many they will still struggle to have an ‘average’ year in terms of profitability.”