This year’s Single Farm Payment will be around 9 per cent down on last year, following the exchange rate to calculate this year’s payment set on Tuesday.

Agriculture and Rural Development Minister Michelle O’Neill announced that the exchange rate to be used to calculate 2014 Single Farm Payments Sterling payments will be made using the exchange rate of €1 = £0.77730. This compares with an exchange rate of 0.83605 in 2013.

On the basis of the new rate, it is estimated that the total net value of 2014 SFP to local farmers would be in the region of £240.5million compared to £265.6million for 2013. This is a drop of around 9 per cent.

This budget figure includes the impact of entitlement scaleback and the application of financial discipline in 2014. The exchange rate accounts for £18.2million of the £25million reduction from 2013 to 2014.

Single Farm Payments are set in Euro and converted to sterling each year using the exchange rate calculated in accordance with the EU regulations.

For 2014 scheme year the rate is the market rate according to the European Central Bank on September 30 2014.

As a result of the CAP Reform agreement, from 2015 scheme year onwards, the exchange rate for direct payments will be calculated using the average market rate during the month of September.

The Minister said: “This year’s exchange rate is less favourable than last year’s rate and is disappointing news for local farm businesses as it will reduce the amount of Single Farm Payment received. Single Farm Payment remains an important element of farm incomes and I remain committed to ensuring that payments are issued to local farmers as early as possible.” Ulster Farmers’ Union President Ian Marshall said; “Unfortunately, since the 2013 rate was set at 0.83605 we have seen a constant slide of around 7% over the last twelve months to today’s exchange rate of 0.7773, which is just slightly lower than the 2012 rate of 0.79805 and is the lowest exchange rate for the past seven years.” “This year we will also have a scaleback of a further 9.22%, which is mainly due to CAP changes whereby modulation is no longer deducted from payments but a permanent reduction is applied to SFP entitlement values instead. The combination of these changes effectively results in an overall reduction of around 16% in comparison to last year.