Farmers could boost income by recieving subsidies in euros
UK agriculture could receive a £350m boost if farmers chose to receive their annual Single Farm Payment (SFP) in euros and not sterling, a currency expert has advised.
According to Currencies Direct, a company specialising in foreign exchange, UK farmers who receive their SFP in euros and then convert the cheque back to the weaker sterling could be in line to receive an average 17% increase on their annual subsidy.
This is because the European Commission has fixed the price at 1.0997 on Wednesday, the weakest sterling conversion rate since the SFP was introduced in 2005. In practical terms, this means a €20,000 payment, which would have converted to £13,936 in 2007 and risen to £15,806 in 2008, has risen £4,250 to £18,186 in 2009.
A number of British farmers have already taken advantage of the situation, with Currencies Direct noting a hefty €3.5bn for sterling orders hitting the currency markets this week as a result of farmers exchanging euro cheques for sterling.
Mark O’Sullivan, director of dealing at Currencies Direct, said that the plummeting pound has provided “shred farmers” with the opportunities to make some savings over the past two years. He pointed out that farmers who think sterling will drop yet further could risk holding on to their euros in a euro account and then convert back to sterling at the optimum rate. But he warned: “The market changes very quickly and we could see a different picture in a year’s time.”
“UK farmers will have to carefully consider whether taking the 2010 SFP in euros is such a good idea,” he added.
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