The Euro exchange rate that will be used to calculate payments under this year's Single Farm Payment Scheme has been set at the low rate of €1 to £0.77730.

The exchange rate was posted by the European Central Bank on Tuesday. SPS allocations are set in Euros and converted into sterling each year, using a conversion rate set on a single date (the last working day in September).

The 2014 exchange rate is the lowest rate since 2007, meaning payments are worth less than in recent years.

From next year, when the new Basic Payment Scheme comes into effect, the exchange rate for direct payments will be based on the average rate seen over the month of September.   

NFU advisor Richard Wordsworth said on Thursday,  "The drop is just over 7 per cent. Clearly this less favourable rate for 2014... will hit farming businesses hard, especially at a time when farm gate prices have been dropping significantly."