Farmers in the UK have been given a boost with the news that a Single Farm Payment will remain roughly the same size as last year.

There were fears that December’s payment would fall by around 5% after the CAP budget was cut by 9% when heads of state agreed a smaller EU budget in February.

However, figures showing that the exchange rate for converting SFP from euros is 4.8% higher than 2012 have put to bed this anxiety.

Richard Means, Farming Consultant based at the Cambridge office of Strutt & Parker, said the rate is good news for farmers.

The official European Central Bank rate for converting the 2013 Single Farm Payment to pounds from euros has been set at €1 to £0.83605, compared with last year’s 0.79805.

The Single Farm Payment is an agricultural subsidy paid to farmers in the EU, offering a helping hand with daily costs.

National governments are charged with the task of making their own arrangements for implementation and paying farmers. In the UK, the Rural Payments Agency is responsible for carrying this out.

Richard said: “If we were to assume that the national flat rate payment remains at, or similar to, the 2012 rate of €323.91 per hectare, after deducting an estimated 5% for financial discipline in order to keep payments in line with the Budget, a further 19% for EU and UK modulation and finally converting euros into sterling at the set rate, this would give a payment per hectare of £208.38 per hectare vs. £209.38 per hectare in 2012.”

He added: “Of course, confirmation of the national flat rate value and financial discipline are still to be decided. We would expect to know details of this within the next few weeks.”

Modulation rates in the UK for 2013 are unchanged compared to 2012 and the Welsh and Scottish payments can now be calculated – assuming confirmation of the proposed 4.98% cut to CAP known as financial discipline, which is being applied for the first time this year.

For more information, contact one of our farming experts.