Farmers’ Union of Wales (FUW) President Ian Rickman has responded to the Draft Budget announced by the Welsh Government today (Tuesday 10 December).

The draft Budget announced an increase in every government department with the Climate Change and Rural Affairs receiving an additional £36.35m (6.6%) in revenue and £71.95m (31%) in more capital funding. 

The Welsh Government also announced it would be maintaining the Basic Payment Scheme ceiling at £238m and providing an additional £5.5m resource and £14m capital funding for wider rural investment schemes.

Earlier this year, FUW submitted comprehensive evidence to the Senedd Finance Committee outlining the urgent need to safeguard and restore farm funding, as well as maintaining the Basic Payment Scheme (BPS) payments at their current rates. This call follows a series of cuts over recent years to the Welsh Rural Affairs budget, with the 2023-2024 financial year seeing a cut of £37.5 million. This was followed by the 2024-2025 budget, which revealed a further year-on-year cut of £62 million, the largest relative reduction of any of the Welsh Government departmental budgets at around 13%.

Responding to the Draft Budget announcement, FUW President, Ian Rickman said:

“Welsh farmers are faced with growing demands to deliver an ever increasing range of sustainability and environmental objectives, while continuing to produce high quality food. Considering the disproportionate cuts faced by the Welsh Rural Affairs budget over recent years, the Welsh Government’s decision to increase the Climate Change and Rural Affairs revenue budget by 6.6% is one to be welcomed - and it is now vital the Welsh Government provides clarity on how this departmental funding will be distributed to support family farms and our rural communities.

The FUW has been clear that as a minimum, the Welsh Government must safeguard Basic Payment Scheme payments for 2025-2026, particularly as we look ahead to the transition towards the Sustainable Farming Scheme. To this end, we do welcome the decision to maintain the BPS payment ceiling - which is crucial in providing a level of security for farmers in Wales as they face a plethora of other challenges and changes.

Whilst additional funding has been provided for wider rural investment and environmental schemes, urgent questions remain regarding how this compares with the rural investment Wales historically received through the European support programmes.

Considering that the UK Government made a decision to maintain previous levels of Rural Affairs funding through the Welsh Government’s Block Grant, there is no reason why any funding should be retracted from support for Rural Affairs - particularly when considering Wales previously received around £90 million through the European Agricultural Fund for Rural Development, around half of which was transferred annually from the direct payments received by farmers.

Looking ahead, it’s crucial that any increase in the Climate Change and Rural Affairs budget is fairly allocated towards the agricultural sector. Fundamentally, as economic modelling will likely demonstrate, future budgets for the Sustainable Farming Scheme cannot be expected to remain at current levels - It must, at the absolute minimum, be maintained as the equivalent of total historic European Common Agricultural Policy funding of at least £337 million per year.”

The Farmers’ Union of Wales (FUW) has reiterated its calls for the Welsh Government to safeguard farm funding ahead of its draft budget announcement for 2025-2026 next Tuesday (10th December 2024).

As part of their calls, FUW President Ian Rickman has urged the Welsh Government to reinstate the full Welsh Rural Affairs Budget to its initial 2023 levels, at £482.5 million, as well as maintaining the existing Basic Payment Scheme (BPS) rates available for Welsh farmers.

The Union’s calls follow a series of cuts over recent years to the Welsh Rural Affairs budget, with the 2023-2024 financial year seeing a cut of £37.5 million. This was followed by the 2024-2025 budget, which revealed a further year-on-year cut of £62 million, the largest relative reduction of any of the Welsh Government departmental budgets at around 13%.

Commenting ahead of the draft Budget, FUW President, Ian Rickman said:

“This draft budget coincides with a period of mounting pressure for Welsh farmers,  and provides an opportunity for the Welsh Government to reinstill its support for the sector.

Over recent years, we’ve seen the Rural Affairs budget disproportionately cut - despite a growing expectation for the sector to deliver an ever increasing range of sustainability and environmental objectives, while continuing to produce food.

At around 2%, Rural Affairs funding constitutes a very small proportion of the Welsh Government’s total budget - but the multiplier effects from the funding - be it economic, environmental, and societal - is significant.

Considering the increased allocation of total funding for Wales from the UK Treasury, it’s vital for the Welsh Government to reinstate the budget to its previous 2023 levels.”

Ian Rickman, also highlighted the urgent need for the Welsh Government to maintain the current rate of payment through the BPS for the upcoming year.

On average 80% of farm business income comes through direct (BPS) payments, providing a significant safety net for many Welsh farms, with funding heavily reinvested locally providing employment and economic growth.

The shrinking Welsh Rural Affairs budget has coincided with a significant reduction in the replacement agriculture and rural development funding made available for Welsh farming through the UK Treasury following our departure from the European Union. 

This has seen Wales receive around a quarter of a billion pounds less in funding for agriculture and rural development than could have been expected had the UK remained in the EU. This equates to a loss of around £15,000 per BPS claimant in Wales since 2019.

Commenting on the importance of maintaining the BPS rates in 2025, Ian Rickman added:

“We know that for many family farms, BPS is the difference between a viable and an unviable business. As we have already made clear to the Welsh Government on several occasions, maintaining these rates is imperative in order to deliver much needed stability and confidence within the sector.

With 50,000 people working in agriculture in Wales, and being part of a wider food and farming sector worth over £9 billion to Wales annually, the economic, employment and social implications of any cut in BPS could be drastic for food production, the industry and rural Wales as a whole.”

The FUW has also urged the Welsh Government to ensure the £340 million received from the UK Government, as replacement agricultural funding, continues to be invested in the sector, following changes in the UK Government’s Budget announcement in October.

Historically, devolved governments received funding for agriculture and fisheries as a ringfenced addition, however, from 2025-2026 the UK Government confirmed the Barnett formula will apply, with current funds being ‘baselined’ within Wales’ block grant for 2025-2026.

The FUW has previously warned such ‘Barnetisation’ of agricultural funding could significantly disadvantage Wales’ rural budget and agricultural needs - representing a departure from what was previously a rural needs - rather than a population based allocation.

It’s often said that things come in threes, and for Welsh farmers this does seem particularly true at the moment.

November started with widespread concern across the sector following the UK Government’s Budget and the changes to APR and inheritance tax. As displayed on the streets of London, the changes have sparked genuine fear within the sector over the long-term sustainability and succession plans for farms.  Meanwhile it is increasingly apparent significant questions remain surrounding the Treasury’s figures.

Second came the announcement surrounding the revised Sustainable Farming Scheme at the Winter Fair last week. It’s fair to say the latest proposals have fared better than the original scheme that was launched earlier this year. Whilst there has been progress, the devil remains in the detail; both in regards to the proposed payments and economic assessments. Getting this right remains key for the future of Welsh agriculture, the environment and our rural communities.

Last, and certainly not least, we now await the Welsh Government’s draft Budget next week, with the Welsh Rural Affairs settlement vital to farmers and our rural communities.

We know Welsh farmers have seen a drastic reduction in funding post-Brexit. UK Government’s replacement funds for the previous European Union Common Agricultural Policy has fallen significantly short of historic values. For example by the end of the current financial year, Wales will have received around a quarter of a billion pounds less in funding for agriculture and rural development than could have been expected had the UK remained within the EU. This equates to a loss of around £15,000 per Basic Payment Scheme (BPS) claimant in Wales since 2019.

This has meant a shrinking of the Welsh Rural Affairs budget by £37.5 million within the 2023-24 financial year, whilst the publication of the Welsh Government draft budget for 2024-5 revealed a further year-on-year cut of £62 million. This equated to a drop of around 13% - the largest relative reduction of any of the Welsh Government’s departmental budgets.

Whilst we appreciate the wider financial pressures faced by the Welsh Government, this disproportionate cut in funding for rural affairs remains a blow.  This is even more of a concern at a time when Welsh farmers are expected to deliver an ever increasing range of sustainability and environmental objectives, while also producing food.

Looking forward to the upcoming budget, it’s vital that at the very least the expected £340 million is allocated to the Welsh Rural Affairs budget. As part of this, maintaining BPS payments at current rates must be a priority. We know 80% of farm business incomes come from BPS payments. With 50,000 people working in agriculture in Wales, and being part of a wider food and farming sector worth over £9 billion to Wales annually, the economic, employment and social implications of any cut in BPS could be drastic for the industry and rural Wales.

Whilst retaining BPS at its current level will be a priority, it’s also essential that the entire Welsh Rural Affairs budget is increased in line with inflation wherever possible, particularly given the increased allocation of total funding for Wales from the UK Treasury.

This year’s Winter Fair was a sweeping success once again, bringing the agriculture sector together, and showcasing the very best of rural Wales, as well as an opportunity for some early Christmas shopping amidst all the brilliant produce and goods.

Of course, one of the main talking points revolved around the announcement of the revised Sustainable Farming Scheme (SFS) Outline by the Deputy First Minister and Cabinet Secretary for Climate Change and Rural Affairs, Huw Irranca-Davies MS. Many will recall the previous proposals sparked grave concern within the industry and a Welsh Government consultation earlier this year drew an unprecedented 12,000 responses. 

Alongside other important ongoing issues such as bovine TB, water quality regulations and inheritance tax relief, revising this Scheme has therefore remained a key priority for the FUW over recent months as we fully understand how important farm support is to the viability of our farm businesses, the rural economy and the wider supply chain here in Wales.

Due to this importance, the FUW has taken the opportunity to engage with Welsh Government stakeholder groups over recent months. Through this collaborative approach we’re pleased to have pressed to ensure the removal of the previous 10% tree cover scheme, and replaced with a scheme-wide target and a revised Universal Action. Similarly, the overall number of Universal Actions have been reduced from 17 to 12, and Sites of Special Scientific Interest and areas linked to common land grazing rights will now be eligible for a proportion of the Universal Baseline Payment. These are only some changes within the revised scheme and the FUW looks forward to discussing the full proposals further with members over the coming weeks.

Crucially, the announcement earlier this week only marks the end of the beginning, and there remains a high level of detail to work through and confirm. To this end, the updated economic analysis and impact assessments are of crucial importance. The Welsh Government’s commitment to developing a Social Value Payment that reflects the actions Welsh farmers undertake that contribute to all 4 Sustainable Land Management objectives will also be of key importance.

While there have been some significant changes to the scheme, we must now ensure that the associated budget and payment methodology deliver real economic stability for our family farms in Wales as we face a backdrop of many other significant challenges.