The exchange rate for converting subsidy payments under the Single Payment Scheme from Euros to Pounds has been fixed yesterday at 86p per Euro which compares to last year’s rate of 91p. Although this represents a 5.5% fall in a farmer’s income derived from the Single Payment Scheme, it is much better than many feared only a month ago when the exchange rate was nearer 82p per Euro.
The depreciation in the value of Sterling over the last month is a reflection of the continued uncertainties in the wider UK economy. However, as the rest of the economy suffers, farmers have in general benefitted from the recession, having seen the value of their Single Payments appreciate by around 30% since 2006 and commodity prices rise as exports have become more competitive.
As a result, Single Payments represent a significant element of the income of most farmers, many of whom would lose money were the system to be abolished.
The Single Payment Scheme is up for review in 2013 and the political posturing is in full swing at a European level trying to hammer out a system for the future which is fair to both the European tax payer and farmer.
However, what is certain is that there is a continued need to support agriculture, not just for food security, which has been brought in to sharp focus in recent months as Russia has suffered droughts and banned wheat exports, but also for the “Public Goods” that the farming community delivers through the management of the British landscape and its wildlife which is an expensive and often thankless task.