2016 Basic Payment Scheme exchange rate set at €1= £0.85228
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% 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 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, as highlighted by the forecasts for net farm income for ‘all farm types’ for the year to March 2016 down by 25% to £13,000.
Weaker pound is 'positive news'
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.
"The weaker pound is positive news for BPS payments," Mr James said, "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 Welsh farming businesses.
"Following discussions with Welsh Government we are heartened by the news that they are confident of returning to their normal excellent payment delivery levels when the payment window opens on 1 December.
"It will also be crucially important to ensure that cross border payments are not unduly delayed and that the Rural Payments Agency (RPA) and Rural Payments Wales (RPW) are able to quickly and effectively share data.
"Following the Brexit vote it is also important to reiterate the uncertain times we are in, we know as a result of recent announcements from the UK Treasury and our Cabinet Secretary that the BPS is guaranteed up to and including the 2019 scheme year," Mr James concluded.
