The Single Farm Payment (SFP) to British farmers will remain roughly the same as last year, it has been confirmed.
Many farmers had expected a drop of around five per cent after the Common Agricultural Policy (CAP) budget was cut by nine per cent when EU leaders agreed a smaller budget back in February.
However, it has now been confirmed that the exchange rate for converting SFP from euros will be 4.8 per cent higher than last year. The official European Central Bank rate for converting the 2013 SFP payment from euros to sterling is set at one euro to £0.83605, compared to £0.79805 last year.
While the conversion rate is not as good as some might have expected, it will nevertheless come as good news for farmers who had budgeted for a fall.
Meanwhile, planned reforms to CAP are being opposed by the National Farmers’ Union (NFU). The reforms are designed to reduce spending on payments to farmers acrossEuropebut British farmers already receive lower levels of payments than some of their European competitors.
The CAP consists of two pillars, pillar one for direct subsidies via the Single Farm Payment and pillar two, covering funding for rural development programmes.
The reforms allow individual countries to transfer up to 15 per cent of direct payments from pillar one to rural development programmes in pillar two. In Britain, DEFRA is intending to transfer the full 15 per cent from the pillar one fund to the pillar two fund but such a move is opposed by the NFU.
Clearly, this will have an impact on farmers inBritain, who will see their SFPs reduced in order to fund other programmes which may not directly benefit them.
Transitional rules will apply to the CAP reform from 1 January 2014 with full implementation due in 2015.
At Milsted Langdon, our specialist agricultural team can help you with issues such as budgeting and cost reduction, helping to ensure you are as prepared as possible for the unexpected. To find out how we can help, please contact us.