Farmers are set to benefit from an increase in their 2016 Basic Payment Scheme (BPS) payment thanks to an adjustment to the exchange rate.
The 2016 exchange rate sees an increase of 16.5 per cent, taking the value of €1 to £0.85228.
Sally Horrocks, a farm business consultant at property consultancy George F. White, said: “This news will be a welcome relief for farmers as farm incomes have been under severe pressure over the past 18 months. It means that lowland and upland farmers will see an increase in their area payment of around £12 per acre extra than 2015, and those with moorland seeing an extra £3 per acre.”
The increased payments will keep many businesses viable in the coming year as they will help to offset input cost inflation, National Farmers’ Union adviser Richard Wordsworth said.
“The increased BPS payments expected by many this year will help to relieve short-term pressure on cash flow, the lifeblood of any business – though many will still be feeling the long-term pressures on their margins and profitability,” he said. “A weaker pound will also have a negative impact on production costs, as the prices of imported inputs, most notably energy, fertilisers and machinery, increase as the pound depreciates.”
Andrew Naylor, head of Lloyds Bank Agriculture, said more of the bank’s customers had minimised their exposure to possible currency losses this year by opting to receive their subsidy in Euros and forward fixing their exchange rate earlier in the year.
“Whether this was down to depressed commodity markets or volatility following the EU referendum, we aren’t clear,” he said.