EU farm ministers fix SFP currency conversion date.

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Author: Riley, Jonathan

EU FARM ministers have settled on Sept 30 as the date for converting UK producers' single farm payments from euros to sterling, leaving the new-style aid cheques exposed to the vagaries of the currency markets.

The date is contained within a new regulation on funding the common agricultural policy (CAP) which was agreed by this week's agriculture council in Brussels.

A number of countries, including the UK and Poland, had sought a longer period for fixing the exchange rate. In the past Brussels has taken a monthly average to decide on a rate for converting income aids.

But the EU Commission has argued that using a single day fits in better with its policy of simplification and Sept 30 has been chosen as it is the last day of the EU's financial year.

"This could be problematic as strange things can happen in a single day's trading on the foreign exchanges," said Richard King of farm business consultants Andersons. "That could result in a big bonus or a big loss for British farmers."

Other non-euro countries could be similarly affected, though many, such as Denmark and Sweden, plus most of the new member states, have their currencies closely pegged to the euro.

The new package agreed by agriculture ministers also sets the conditions for scaling back CAP payments should farm spending approach its pre-set ceiling -- the so-called "financial discipline". The deal means that member states must agree any cuts by June 30 each year, but may revisit the reductions up to Dec 1 if more money becomes available.

CAP funding is also being streamlined into two distinct funds -- one for traditional farm supports and one for rural development.

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Edited by Jonathan Riley, 020 8652 4915