Euro rate brings slight fall in value of EU farm subsidy payments
The value of EU subsidies for British farmers will drop very slightly this year, following confirmation of the exchange rate for the Basic Payment Scheme (BPS).
Under the rules of the EU’s Common Agricultural Policy, support payments for UK farmers are set in euros and then converted to sterling using the average of the European Central Bank (ECB) exchange rate recorded across the month of September.
The Rural Payments Agency (RPA), which distributes the EU’s agriculture funding in this country, says a euro rate of £0.89281 will be applied for BPS 2018 – a fall of just 0.2% from 2017.
It is the second most favourable since 2009, when it topped 90p per euro.
Jason Cantrill, farming consultant at the Norwich office of Strutt and Parker, said: “The exact value of entitlements for 2018 will not be confirmed until November, as it is based on the total number of hectares of eligible land claimed for in each region. However, at this stage, farmers look set to receive payments in line with last year.”
When Britain leaves the EU, the current system of payments based on land ownership will be phased out and replaced with a domestic system which pays public money for “public goods” such as environmental work, as outlined last month in the government’s Agriculture Bill.
Mr Cantrill added: “Looking forward, Defra has made clear that the 2019 Basic Payment will be paid in the same way as in 2018. In 2020, the payment will come from the UK government and will be subject to minor changes of simplification. Thereafter payments will fall and ultimately disappear altogether, with this likely to be phased over six years to 2027.”
Rural agents said the value of BPS payments for a 200ha lowland farm in England (including greening and after Financial Discipline has been applied) was £227.88/ha in 2017, £212.81/ha in 2016, and £178.95/ha in 2015.
The National Farmers’ Union said, based on the 2017 BPS fund being worth £1.762bn at a euro rate £0.89470, the lower exchange rate is likely to mean the 2018 BPS fund will fall by around £4m in sterling terms.
An NFU spokesman said: “This is a favourable exchange rate when you look back at previous rates, but after a year the industry has endured significant impact from the wet and drought weather conditions, these monies will be needed more than ever.”