Volatile pound will affect amount UK Farmers receive from European subsidy

Moneycorp warns British farmers to act now and take control of their Single Farm Payment. By electing to take their payment in euros, farmers will be in a better position than if they were to leave things to chance and take the payment in sterling. UK farmers that applied for the Single Farm Payment in euros could have received 7% more than if they chose to receive their payment in sterling[1].

The Single Farm Payment is calculated in euros and if a farm chooses to be paid in sterling, the amount will be converted according to the European Central Bank exchange rate set on 30th September 2010. There is no guarantee that the value of sterling against the euro will be favourable at that time and farmers are therefore left at risk of a weak euro, or strong sterling, resulting in a lower value payment. Farmers should therefore opt to be paid in euros so that they can take control of their payment and plan ahead. They then have a variety of choices as to how and when they wish to manage their payment and with the help of a currency specialist like Moneycorp, ensure they achieve the best possible exchange rate.

British farmers still stand to maximise their grant from the Single Farm Payment if they act now.  By gathering as much market information as possible, and choosing a euro payment this year, they stand to take advantage of recent fluctuations in the currency markets. Farmers must mitigate against possible risk this year by taking a euro payment and applying well in advance of the deadline on 17th May 2010.  

To help UK farmers plan for movements in the currency markets and make the most of their Single Farm Payment, Moneycorp offers a flexible solution. Farmers can elect to take out a free, forward contract which allows them to fix an exchange rate for a future date. Alternatively they can select a foreign exchange option which allows them to guarantee themselves a minimum exchange rate whilst benefitting from any improvements. Knowing exactly how far the Single Farm Payment will stretch should also make planning and budgeting for the farming year more manageable.

As Chris Redfern, Senior Account Executive at Moneycorp explains:
“Given the current unpredictability of the currency markets, it is crucial that farmers understand how to ride the currency wave and prepare themselves for its various peaks and troughs.

“A currency specialist like Moneycorp can offer a variety of choices as to how to manage their payment such as ‘forward contracts’ or ‘options’, which allow farmers to secure an exchange rate in advance of the payment date. And in today’s economic climate, this could be very favourable.”

David Foot, a farmer from David Foot Ltd, who signed up to the Moneycorp forward contract last year, says that Moneycorp’s specialist knowledge and its flexible forward contract has helped him to transform his business:

“I wanted to know in advance how much my payment would be worth in December so I spoke to Moneycorp after a  friend recommended them. They helped me achieve my planned for rate of exchange with a forward contract. My Account Executive was very knowledgeable about the SFP and the company had a range of products for me to choose from. Compared to the response I received from my bank when I asked them for help I found Moneycorp far more flexible and helpful and their exchange rates were far more competitive.”

National awareness around Single Farm Payments and the risk factor involved is steadily increasing, as the farming industry now matters to Britain more than ever. In the past couple of years the UK has witnessed food price spikes in addition to a global recession, during which the food and farming industries’ made invaluable contributions to Britain’s economy. The importance of the farming industry to the nation and the economic difficulties that it has faced makes it even more crucial for farmers to ensure that they are gathering as much market information as possible and maximising their grant.