THE EUROPEAN Commission has confirmed the exchange rate by which farmers and crofters will receive their direct payments – which has dropped by 0.21% against Sterling on the year.

For those 16,600 Scottish farmers who have chosen to receive their 2019 Basic Payment Scheme support in Sterling, it will be calculated using the exchange rate of €1 = £0.89092.

The Department of Agriculture, Environment and Rural Affairs has estimated that the total net value of 2019 Direct Payments to local farmers across the UK will be reduced by £0.61 million compared to 2018.

All payments for direct farm payment schemes are set in euro and converted to Sterling each year using the exchange rate calculated in accordance with the EU regulations. In 2019, the rate is the average market rate for the month of September according to the European Central Bank.

Rural economy secretary Fergus Ewing commented: “With the first tranche of National Basic Payment Support Scheme loan payments hitting bank accounts later this week, eligible farmers and crofters will receive up to 95% of their CAP entitlement at the earliest possible juncture. I hope the confirmation of the exchange rate will provide them with some degree of financial certainty.”

The exchange rate calculation will continue regardless of the date of any exit from the EU as these regulations will be converted to UK law.

NFU Scotland’s director of policy, Jonnie Hall said: “The sustained lift in the exchange rate used to calculate support delivered through Scotland’s Basic Payment Scheme reflects long-term weakness in the value of Sterling against other currencies – a process that started after the decision to leave Europe was taken in June 2016.

“The decrease of 0.21% this year matches a similar, small fall of the same scale in 2018 but follows significant lifts of 5% and 17% in 2017 and 2016 respectively."

Mr Hall continued: “Traditionally, a weak sterling is good news for support payments and should strengthen the competitiveness of UK exports, but the downside can be higher priced imported inputs such as fertiliser, animal feed and machinery.

“This year, the uncertainty being generated by the very real possibility that we could crash out of Europe without a deal means we would face the worst of all worlds,” he warned.

“That would lead to disrupted access to Europe for our goods; a crippling tariff schedule that would hit exports while handing a competitive advantage to some imports and high costs of imported inputs maintained.

“The good news is that applications to the first round of Scottish Government loan scheme letters closed on Friday and this new exchange rate will be factored in to the 95% BPS/Greening awards expected to arrive in bank accounts soon,” he added.

“That valuable cash injection into the rural economy should eases cash flow worries and allows bills to be settled and purchases to be made as we move into a very uncertain winter.”

In Northern Ireland, DAERA announced that the exchange rate decision meant that its Young Farmers’ Payment rate will this year be £44.68 per hectare, with a limit of up to 90 hectares.