SPS Conversion Rate Falls

The rate for converting the 2014 Single Payment will be €1 = £0.7773.  This is 7% less than last year’s figure of £0.83605 and the lowest seen since 2007.  Sterling has actually strengthened slightly over the last few days which means a worse conversion rate for UK farmers than might have been the case.  The Pound had been consistently around 79p for most of September.  The reduction in the conversion rate will be another blow to farmers in a year when low prices have hit returns.   

The rate currently used for converting SPS payments from Euros to Pounds is the ‘official ECB’ rate on the 30^th September.  The table below shows the rates back to 2007 (the last time the conversion was so low). 

In the past, the announcement of the conversion rate would allow actual payments in Scotland and Wales to be calculated.  This year there is more uncertainty.  Firstly, the rate of Financial Discipline for 2014 is unknown.  For 2013 it was 2.45%.  A rate of 1.3% has been proposed for 2014, although this is not yet fixed.  An announcement is expected towards the end of this month.  Secondly, entitlement values are going to change for 2014 compared to 2013.  This is a result of the shift from using the ‘modulation’ mechanism to the new ‘Pillar Transfer’.  This sees entitlement values drop, but no further modulation deductions then made.  It is not yet clear when the Scottish and Welsh Governments will notify claimants of this. 

In England the situation is further complicated by the need to undertake the annual revaluation of entitlements.  Entitlement values are calculated from scratch each year and can vary depending on the number of entitlements claimed.  The table below gives our current estimated English payments for 2014 assuming 1.3% Financial Discipline.  The payments for last year are shown for comparison.

*converted at €=£0.7773, 1.3% financial discipline (to be confirmed)