Rural Payments and Services

2018 direct payment scheme exchange rate confirmed.

The exchange rate to be used for direct farm payments in 2018 has been confirmed.

Set by the European Commission, the 2018 exchange rate will be €1 = £0.89281, a slight decrease of around 0.21% compared with last year. This is based on the average of the European Central Bank rates set over the month of September.

The decision affects around 16,400 farmers who have chosen to receive their 2018 Basic Payment Scheme support in Sterling.

Rural Economy Secretary Fergus Ewing said;

“I can confirm the exchange rate set by the European Commission for farmers who choose to receive their Basic Payment support in Sterling will be €1 equaling £0.89281.

“In addition, eligible farmers and crofters will shortly begin to receive up to 90% of their CAP entitlement under the national BPS loan scheme announced in the summer. When taken with the confirmation of the exchange rate, I hope it will provide farmers and crofters with some degree of certainty that will enable them to plan ahead for the year to come.”

Background

All payments for direct farm payment 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.

The rate used in 2017 was €1 = £0.89470: the 2018 rate, therefore, represents an slight reduction of around 0.21%.

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 1.422184% on all direct payments in excess of €2,000. Direct payment schemes that would be affected in Scotland are 2018 Basic Payments Scheme and the 2018 Voluntary Coupled Support Scheme for Beef and Sheep farmers.