Carter Jonas
Carter Jonas

SPS payment rate is unwelcome news

The value of this year’s Single Payment Scheme (SPS) payments has been set at 77.70 pence per Euro, the lowest for seven years. The Single Payments, which are defined in Euros, are converted to Sterling in order to be paid to British farmers, based on the Euro / Sterling exchange rate on September 30.

It is unwelcome news to farmers already facing difficult trading conditions as wheat prices have plummeted to around £100 per tonne simultaneously with milk prices continuing to fall.

Most dairy farmers are now being paid below 30 pence per litre for their milk and some as little as 25 pence per litre. At these prices, farmers will be losing money and with European support payments also falling farmers are facing a tough year ahead.

It is estimated the Single Payment received by farmers this year will be approximately 12 per cent less than last year, in part due to the exchange rate referred to above but also due to other deductions.

These other deductions include 10 per cent compulsory modulation and a 12 per cent transfer from direct payments (Pillar 1) to rural development (Pillar 2). Together these total 22 per cent, three per cent higher than the deductions imposed in 2013. In addition there is also a 1.6 per cent cut in the UK CAP budget and the European Commission’s Financial Discipline Mechanism (FDM) will also be imposed on those farmers receiving more than 2,000 Euros. The FDM rate is currently proposed to be 1.3 per cent although this could vary up or down.

Like NFU vice-president Guy Smith, I feel that for many farmers, looking at increasingly tight cashflow projections in the face of falling commodity prices, news that SPS payments are also going to be down will be like another unwelcome turn of the financial screw. 

James Stephen

James Stephen


James is a partner who splits his time between Wells and Oxford offices. He specialises in rural estate management, landlord and tenant matters, compulsory purchase and compensation, rural grant a...

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