The rate at which European support payments to farmers will be paid for 2017 has been fixed at 89.47p per Euro which represents an increase of approaching 5% compared to last year’s exchange rate which is welcome news for farmers. But things could have been even better had sterling not strengthened during September meaning the exchange rate dropped from over 92p/Euro at the end of August to around 88p/Euro at the end of September.
This is however a significant increase of over 22% compared to the rate farmers were receiving two years ago before the Brexit referendum which has given many a significant boost, not only in support payments but also in commodity prices which have generally increased as the pound has weakened.
Having said that there are a significant number of beef and sheep farms which rely on these support payments to make a profit and although the prospect of Brexit has given these businesses a boost over the last year, it remains to be seen whether this boost will be sustained in the long term.
This is a subject that has been addressed by a number of conferences and working groups we have attended in recent months where industry leaders are trying to look in to the “post Brexit crystal ball” to predict the future for UK agriculture. As we see it Brexit is just one of those many uncertainties that farmers have always had to face but equally it has the potential to stimulate significant change within the industry.
In this context we know many farmers want to farm without any form of support and whilst we understand this sentiment if support is withdrawn it would be naïve to imagine that all regulation will also disappear. Further the relative importance of support payments to different sectors of the farming industry varies enormously. Whilst we believe intensive pig and poultry units and efficient dairy farms would survive without support payments,this may not be the case for some beef and sheep farms.
We suspect if we look back in 20 years’ time beef cattle and sheep will still be seen grazing our fields but the number and overall makeup of the businesses owning those livestock may well be rather different from those we see today.
James Stephen - Rural Partner, South West Region