This compares favourably to the rate set last year for BPS 2015 (€1 = £0.73129).
BPS payments for England are set in euros and then converted into sterling. This reference rate is an average of the European Central Bank exchange rates set in September. The 2016 rate is a 16.5% increase on 2015 and one of the most favourable since 2011.
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NFU senior BPS adviser Richard Wordsworth said: “This exchange rate will boost payments to the industry at a time when it has endured significant impacts on farm gate prices and market volatility. This can be seen reflected to a certain extent in the increased level of industry borrowings for the period to July 2016, published by the Bank of England.
“The increased BPS payments expected by many this year will help to relieve short-term pressure on cash flow, the lifeblood of any business – though many will still be feeling the long-term pressures on their margins and profitability. A weaker pound will also have a negative impact on production costs, as the prices of imported inputs, most notably energy, fertilisers and machinery, increase as the pound depreciates. These increased payments will keep many businesses viable in the coming year as they are likely to experience input cost inflation.
“The key now is for the RPA to deliver the increased payments expected as promised to at least 90% of farmers before the end of the year – just three months away.”