Farmers look set to see another increase in support payments due to the strength of the euro, currently trading at 90p. The change in exchange rate over the last three years has contributed to a difference in the average area payment plus greening of around £5,000 per farm. For this year’s 18,272 claimants, 90% opted to be paid in sterling with the remaining 1,814 opting for payment in euros. Those getting paid in sterling receive an exchange rate set at a September average.

The weakness of sterling is being driven by current talk of a no-deal Brexit. Unless there are clear signs of a major breakthrough in a post-Brexit deal between the UK and EU, most analysts predict that the sterling will remain weak against other major currencies, including the euro, over the next six months.

That should help to underpin prices for some of our main farm outputs this winter, although it is having a negative impact on inputs such as feed grains and red diesel.

The warning coming from both EU and UK Brexit negotiating teams is that time is running out. Following talks with UK Brexit Secretary Dominic Raab this week, the EU’s chief negotiator, Michel Barnier acknowledged that the original October deadline for a deal to be agreed could be set to slip.

“I’m not going to say October. A few days here or there, but certainly not later than the beginning of November,” he said. The date is important, as it is generally acknowledged that it will take around five months for national governments and the European Parliament to ratify any deal ahead of the UK exit on 29 March 2019.

With a number of UK government ministers warning about the prospect of no-deal (perhaps partly to increase pressure on the EU negotiators), it is making financial markets nervous.

However, if sterling stays around €1=£0.90, it will deliver a short-term boost to local farmers by way of basic payment scheme and greening payments.

Only once since the new system was introduced in 2005 has the rate used to convert direct payments from euros to sterling been above €1=£0.90 which was 2009.