PAYMENTS made to farmers under the 2017 Basic Payment Scheme look set to be four to five per cent higher than in 2016 because of a more beneficial currency exchange rate.

Under the rules of the Common Agricultural Policy (CAP), support payments for farmers across the UK are set in euros and then converted to Sterling using the average European Central Bank (ECB) exchange rate recorded across the month of September.

From September 1 to 27 inclusive, the average rate has been £0.89635, fluctuating from a high of £0.92075 (Sept 1) and low of £0.87565 (Sept 27).

If this is extrapolated to the end of the month it suggests a final 2017 exchange rate conversion in the region of £0.89.

The final conversion rate for the 2016 BPS scheme year was €1 = £0.85228.

Richard Taylor, from the farming department in the Northallerton office of Strutt & Parker, said: “Any increase in the value of payments will be a welcome boost to farmers.

“While farm profitability has improved over the past 12 months, with a weaker pound leading to commodity price rises, farm incomes for many businesses are still way down on 2011-12 levels and levels of farm borrowing are also at an all-time high.

“At the start of the month it did look as if the confirmed exchange rate would be the highest we have ever seen by some margin.

“However, September has proven to be a changeable month in terms of currency, with hints of interest rises from the Bank of England causing sterling to strengthen against both the euro and the dollar.

“What may be slightly frustrating for farmers is that if BPS had been converted using the average ECB exchange rate for August (£0.91121), payments would have been nearly seven per cent higher than last year, which in turn was up 16 per cent on 2015 levels.

“This would have added another £15/ha to the BPS payment for lowland ground in England, assuming entitlements are worth a similar amount to last year.

“As it stands, farmers are potentially looking at payments being about £10/ha higher in lowland areas and £9/ha higher on upland ground.”

The exact value of entitlements for 2017 will not be confirmed until November, as it is based on the total number of hectares of eligible land claimed for in each region.