WIREDGOV

Exchange rate confirmed for Single Farm Payment Scheme.

The exchange rate to be used for the 2013 Single Farm Payment Scheme has gone up.

The rate has been set at of €1 = £0.83605 by the European Central Bank, a rise of almost five per cent compared to last year.

The decision affects about 16,000 Scottish famers who receive their Single Farm Payments (SFP) in sterling. However, any benefit from the improved exchange rate likely to be neutralised by the reduction in payments, called financial discipline, that the Scottish Government is being forced to apply as part of a European budgetary control mechanism.

Rural Affairs Secretary Richard Lochhead said:

“The modest rise in the sterling / euro exchange rate, on its own, might have offered some welcome relief following difficult farming conditions over the past 12 months. However, any benefit is likely to be wiped out by the financial discipline imposed by the EU.

“We successfully lobbied to minimise the impact of financial discipline on Scottish farmers, and as a result Scotland is receiving about €4 million less in cuts than had originally been proposed.

“Support payments like SFP and the beef payments, which will be subject to the financial discipline, are a life-line for Scottish farmers who will want to know when they will receive their payments and how much they will receive.

“The Scottish Government has a strong track record in making early Single Farm Payments, with typically 90 per cent of farmers receiving funds by the end of December. We are striving to achieve a similar timescale for payments this year, but need early clarity from Europe on the level of financial discipline we will have to apply.

“We are working hard to ensure that farmers receive their payments as early as possible and farmers can help with this by responding promptly to any queries they may receive from Scottish Government officials.”

Notes to editors

All payments for direct aid schemes such as the Single Farm Payment and Scottish Beef Calf Schemes are set in euros. The conditions on how to convert these amounts into the national currencies of Member States that do not use the euro are set in European Commission Regulations. The regulations allow the European Commission to set in advance the date on which the exchange rate is calculated. For the 2013 scheme year, the rate for all direct payments is calculated on the last working day of September.

The rate used in 2012 was £0.79805: the 2013 rate, therefore, represents an increase of around 4.76 per cent.

Approximately 16,000 Scottish farmers receive EU subsidies in sterling, accounting for 58% of all Single Farm Payments in Scotland.

The Treaty on the Functioning of the European Union states that the annual budget of the EU must comply with the Multiannual Financial Framework (MFF). When it comes to the CAP budget, there is a financial discipline mechanism provided in the current direct payment regulations. If it looks as if the ceiling for direct payments and marketing expenditure is likely to be exceeded, this financial discipline comes into play. The rules say that the European Commission must calculate an adjustment rate.

The European Commission has proposed a reduction of 4.001079% on all direct payments in excess of €2,000 (c.£1,700). This reduction would apply to all farmers across the EU except in Croatia, Bulgaria, and Romania, which are in the process of phasing in direct payments this year. Direct payment schemes that would be affected in Scotland are 2013 Single Farm Payments and the 2013 Scottish Beef Scheme (which are paid out in 2014 European financial year).

This is the first time the financial discipline has been activated, although the provision for it to be activated has been in place since 2003. Standing guidance to farmers on SFPS, the largest element of direct payments, have always carried the caveat that payments might be reduced if the European Commission invokes the financial discipline.