For the first time since February, the euro has this week traded at over 87p.
Whilst this is good news for Brits holidaying in the euro zone or UK-based importers, for farmers, it’s a different story.
Farmers in the EU are allocated an annual ’Single Farm Payment’ that is paid out from the European Central Bank and denominated in euros. As a result, UK-based farmers’ payments are affected by where the euro / sterling exchange rate is trading.
Chris Birts, head of agriculture at foreign exchange broker, World First, explains, "The European Central Bank sets the exchange rate at which Single Farm Payments (SFP) will be converted from euros into sterling on 30 September and the 2009 SFP rate of 0.9093 was the highest rate yet.
"However this may soon be just a distant memory as the negative news emerging from Europe continues to take hold of the euro. The list of member states whose credit ratings are under review continues to grow and it looks likely that the euro will weaken further against sterling during 2010."
The agricultural team at World First is urging farmers into action. Chris continues, "Farmers choosing to receive their Single Farm Payment in euros put themselves back in control of their money because they can decide when to secure the exchange rate. World First is one of a few brokers that enables farmers to fix an exchange rate to convert their SFP to sterling for the next two years. They can be sure today how many pounds they will receive for both their 2010 and 2011 SFPs."
The alternative is to take the risk and simply accept the exchange rate chosen by the European Central Bank on 30 September.
Bryan Wood, of Cow Pasture Farm in Milton Keynes, has fixed the rate for his 2010 and 2011 SFP, "I was pleased to have been able to fix the rate for my SFP two years in advance with World First and have been delighted with the outcome of this year’s SFP which has given me more pounds than I would have got had I elected to receive it in sterling.
"Being able to fix the rate has given me peace of mind and has allowed me to budget for the next two years knowing exactly how much I will be receiving."
With Monday 17 May being the deadline date for remittance of the SP5 form, where farmers elect to receive euros or sterling, it is a good to time to be weighing up the different available solutions for fixing the rate for your SFP.
Ends
Chris Birts is available for further comment and interviews.
For further information, case studies and statistics, in the first instance please contact:
Wendy Casterton
t: 020 7801 1060
e: wendy.casterton@worldfirst.com
w: worldfirst.com
Notes for editors
On the Single Farm Payment:
• Farmers receive an SP5 form on which they indicate whether they wish to receive their Single Farm Payment in euros or sterling.
• By opting to receive the payment in euros, farmers can decide when they convert their euros in to sterling.
• With a foreign exchange broker, like World First, farmers can fix an exchange rate in advance of receiving their Single Farm Payment. For example, they could fix an exchange rate of 0.8700 today (22 April 2010).
• The SP5 form must be remitted by 17 May 2010 for the 2010 Single Farm Payment.
About World First:
World First is a currency exchange broker, serving both private and corporate clients. Set up in 2004 by directors Jonathan Quin and Nick Robinson, the company is experiencing very fast growth and now employs over 80 people in two offices (London, UK and Sydney, Australia). It was named the 53rd fastest growing company in the UK in the Sunday Times Fast Track 2009. It also won ’Service Business of the Year’ at the Fast Growth Business Awards 2010.
With over 20,000 private clients and 4,700 corporate clients, World First transacted over £1 billion in 2009.
World First’s corporate clients are generally import or export companies, making regular transfers. World First helps them minimise their exchange rate risk and manage their currency exposure.
Private clients largely use broker services to purchase a property abroad, usually a second home or investment or to emigrate.
World First is also now offering currency options to SMEs and private clients through World First Markets Ltd, which is authorised and regulated in the UK by the FSA. World First is the first broker to offer currency options which have, until now, been the preserve of very large corporate organisations through their banks.
World first UK Ltd is authorised and regulated by the FSA as an Authorised Payment Institution and is registered with HMRC. World First Markets Ltd is authorised and regulated by the FSA.
