2014-10-01  

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Single Payment Scheme (SPS) Exchange Rate Fix

NFU senior single payment scheme adviser Richard Wordsworth said: The drop is just over 7 per cent.

Clearly this less favourable SPS rate for 2014 compared to 2013 will hit farming businesses hard, especially at a time when farm gate prices have been dropping significantly.

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The exchange rate is currently based on the single reference day of the last working day of September. However the exchange rate is only part of the story.

As we saw with SPS 2013 payments, Financial Discipline may impact on SPS payments again this year. But what is new this year is the impact on the new 2014-2020 CAP budget, agreed earlier this year. This will generate further reductions in SPS payments this year, due to a reduction in the UK SPS pot of around 1.6 per cent. Also, the movement of monies between Pillar 1 of CAP and Pillar 2 could mean a further reduction of around 3 per cent. Farmers could see an overall reduction in payment of over 12 per cent this year.

“Few will see the positives from DEFRA’s announcement however the inter pillar transfer reduction could have been worse if DEFRA had applied the maximum movement of funds between the pillars.

One positive we will see next year is the use of the Euro exchange rate based on the average of the European Central Bank rates set over the month of September for the new Basic Payment Scheme next year. This will help manage the risk of a fluctuating exchange rate we have seen in recent weeks, and is something the NFU lobbied for during last year’s reform of CAP.”

NFU

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