Farmers losing millions from foreign currency fluctuations

Continuing exchange rate volatility between the euro and sterling could result in farmers losing out on this years EU subsidy payment, according to specialist currency broker, currencies.co.uk.

Around 200,000 farmers across the UK receive approximately 3.3 billion euros every year¹ from the EU in subsidies but exchange rate volatility between sterling and the euro has doubled over the past 3 years since the financial crisis started and this uncertainty looks set to continue.

A farmer converting a subsidy of 100,000 into sterling in Dec 2010 would have received 86,210 yet this would have dropped by 3.75% to 82,990 had they not been reviewing the market and completed the transaction less than two weeks later in early January².

Currencies.co.uk believes that thousands of farmers are leaving themselves exposed to significant financial losses because they have not protected properly against foreign exchange movements.

Currencies.co.uk estimates that a large majority of farms conduct business in foreign currency, often buying supplies from the Eurozone. Yet many farmers have no formal hedging strategy in place to manage their FX risk.

Its not just exchange rate volatility that can eat into farming subsidies, currencies.co.uk warns. Its research shows that the difference between exchange rates offered by high street banks and specialist foreign currency providers can be up to 4%. Farmers looking to convert a lump sum of 100,000 into sterling could be in excess than 3,000 worse off using a bank rather than a specialist currency provider.

Stephen Eakins, Currencies.co.uks senior executive dealer in charge of the farming sector said: Like all businesses many farmers are under increasing financial pressure and EU subsidies can make the difference between farmers surviving or going out of business. Its crucial to maximise their EU subsidy through a proper FX strategy offered from currency specialists.

We offer farmers a diverse range of tailored hedging solutions including forwards and options to those who have previously only had access to the most basic FX products by high street banks. The pro-active service highlighting these peaks can make a difference of several thousand pounds.

1. (1)EC figures for financial year 2009
2. (2)Based on Currencies.co.uks own data

About Currencies.co.uk

• Currencies.co.uk is the new trading name Foreign Currency Direct PLC
• Currencies.co.uk is a leading foreign exchange provider and the first choice for thousands of businesses and individuals to save money when transferring funds.
• The well-established, award-winning company provides a friendly, efficient service to people moving money for everything from purchasing overseas properties to emigration and investment abroad.
• In the past ten years Currencies.co.uk has helped over 40,000 Britons to move money abroad for anything from a overseas property purchase to business invoices.
• For more information on Foreign Currency Direct PLC visit www.currencies.co.uk or call 0800 328 5884