FARMERS and crofters could be among the few to benefit from the pound’s plunging performance against the euro when they receive their annual subsidies from Brussels.
Payments made from the EU’s Common Agricultural Policy are expected to increase by £1 billion next year because of sterling’s recent poor showing against the euro.
By right farmers can claim their subsidies from the European Commission in euros, which they can then use to buy pounds.
By arranging to have their payments made into European bank accounts, they can effectively “sit” on the money and convert into pounds when the rate is favourable.
However sterling’s recent drop in value means the exchange rate has rarely looked as favourable as it is now, meaning one euro will go further when it comes to changing to British currency.
Currently, the euro is worth 96p, compared with 72p 12 months ago and 60p in the spring of 2000.
Subsidies to UK farmers cost the EU four billion euros. At an exchange rate of 72p to the euro, this would be equivalent to £2.88 billion, whereas at the current rate it would be worth £3.8 billion.
Chairman of the Crofters Commission Drew Ratter said UK farmers were gaining after years of loss when the pound was strong.
He said the boost would help offset recent price hikes in vital commodities like fuel and animal feed.
“In past years the very high pound has depressed the value of these payments for farmers in this country. European farmers would be doing better than UK farmers, but now the pound has weakened.
“Given the tremendous surge in costs there has been this year with fuel and feed going up, this has given crofters and farmers a little bonus. Fuel has gone down a bit now, but the cost of feed hasn’t gone down very much. I thought feeding would go down more than it has.”
Chairwoman of the local branch of NFU Scotland Hazel Mackenzie said a number of farmers stood to benefit from the move.
“When you fill out your form before 15th May you can choose to be paid in euros, and you have up until the middle of the year to change your mind.
“It’s something that has come out in the last two to three years, but you do have to have a bank account set up to take euros.”
Adding that the news came as a welcome boost after struggling with high prices she said: “We need it all. Everything else has gone up by that much.”
But while many are celebrating the pound’s fall in value, they may take a gloomier view when they come to buy already expensive machinery of fertiliser – much of which is imported from abroad.
Prices could rise in the meantime, as manufacturers and producers push up their UK prices to cover costs.
Agricultural borrowing in the UK has hit a record high of £11 billion, although that has been slightly offset by a general increase in farm incomes.