British farmers are set for a cash windfall worth hundreds of millions of pounds because of the fall of the pound against the eurp. Within the next fortnight farmers must tell Defra whether they want to receive their subsidies in pounds or euros ahead of the figure being fixed in September.
The last single farm payment was worth about £3bn to UK farmers when it was paid out at the end of last year based on an exchange rate of 79p to the euro. Since then, the euro has appreciated to about 90p.
Peter Kendall, chairman of the National Farmers' Union said that if the exchange rate stayed the same payments would be about 13 per cent higher than last year. This would add up to an extra payout of more than £300m to farmers.
Many farmers have used hedging strategies to fix their payments in advance at 92p per euro or higher. However, that is an option that is only really available to larger farmers. Less prosperous farmers with smaller farms have not been able to do so and are still exposed to market fluctuations.
Perhaps they should set some of the extra money aside to pay their tax bills. Tax liabilities will be higher after increased profits during the last two harvest. Accountants Grant Thornton warned that many farmers faced substantial tax bills next January and July.