Major concerns have been raised at a meeting of the Farmers’ Union of Wales’ Grand Council about cuts to the Welsh Government’s Rural Affairs budget and potential further losses if Rural Development Programme funds are not spent.
The Welsh Government published its latest draft budget for the 2023-24 financial year on 13 December, showing significant differences in budget amounts and allocations since the indicative budget was published in March.
While the UK Government’s Autumn Statement resulted in a further £666 million in funding for the Welsh Government in 2023-24, the Welsh Government proposes cutting its rural affairs budget by nearly nine million pounds.
The fact that the budget allocation for rural affairs has decreased by a considerable amount in the draft budget whilst the overall Welsh budget has increased in nominal terms represents a major concern for FUW members.
The Union fully appreciates that the increase in Wales’ block grant represents a real terms fall in funding due to the high rate of inflation - but the high rate of inflation also means that the nominal cut of almost £9 million to the rural affairs budget represents an even larger cut in real terms.
The decision is extremely concerning given the important work undertaken by the Welsh Government’s rural affairs department at a time of major transitions and pressures for farmers and the rural communities they support.
Despite such concerns, FUW Council members welcomed the Welsh Government’s commitment to maintain a total budget of £238m for direct payments in 2023 and 2024, highlighting that this stood in stark contrast to the situation in England where such payments have been cut by an average of more than 20% in 2022, and are due to be further cut in 2023.
However, it must be noted that the £238 million represents a significant real terms fall for Welsh farms given the current rate of inflation - especially when considering that the latest figures show the price index for agricultural inputs increased by 28.3% in the 12 months to October while increases in farmgate prices came nowhere close to this figure.
FUW Council members also expressed their concerns that if Rural Development Programme funding was not spent by June 2023, Wales would have to return monies to the European Union.
According to the latest figures, in September 2022 20% of Wales' RDP budget - around £181 million - remained unspent. £103 million of this is made up of EU funds, including £45 million taken from farm payments through the 15% Pillar 1 to Pillar 2 Transfer mechanism.
It is understood that all unspent funds that derive from the EU must be returned if they have not been spent by June 2022, including money taken from farmers through the 15% Pillar Transfer.
Council members said it was imperative that the Welsh Government ensured that all RDP funds were spent by the deadline.
It would be particularly galling if, having in 2014 introduced the highest level of ‘tax’ on farm payments in the whole of the EU at 15% to fund what was claimed would be a radical Rural Development Programme, Wales and Welsh farmers end up losing funding because money has to be sent back to the EU.