Welcome income boost as BPS exchange rate set
Published October 4th, 2016
Farmers are set to receive a welcome boost in income from Europe this year. The 2016 exchange rate to be used for 2016 Basic Payment Scheme (BPS) Payments has been set at €1= £0.85228. This represents an increase of 16.5 per cent on the 2015 rate and is the most favourable rate since 2011.
The reference rate used is an average of the European Central Bank exchange rates in September. This is the exchange rate that will be used to calculate the BPS, greening and young farmer elements of the CAP direct payments regime.
The improved exchange rate will be welcomed and will help cushion the blow for the many Welsh farmers who will see their support payments fall as part of the transition from the previous historic basis of support to the new flat rate based BPS. This will be important given that farm incomes have been under immense pressure as a result of difficult market conditions over the past 18 months or so as highlighted by the forecasts for net farm income for ‘all farm types’ for the year to March 2016 down by 25 per cent to £13,000.
A farmer claiming on Non-SDA (non severely disadvantaged area) entitlements who received £20,000 in 2015 should receive £23,308 for the same size claim in 2016, subject to financial discipline being at the same level, when payments start to be made from December 1
NFU Cymru President Stephen James said: “Farmers will see this favourable exchange rate as a help to their businesses in what has been a turbulent time for the industry with low commodity prices particularly for Welsh dairy farmers in 2016. The weaker pound is positive news for BPS payments and for exporting produce like PGI Welsh Lamb, it must be remembered that that there is a downside as it does make imports more expensive and this can have a negative impact on production costs, with inputs like fertiliser and machinery becoming more expensive as the pound depreciates. ”
With the exchange rate now set, farmers’ attention will be turning to the delivery of the BPS payments. Late payments last year caused significant cash flow problems to many thousands of farming businesses.