FUNDING

The Sustainable Farming Scheme, underpinned by the first ever Agriculture (Wales) Act, represents the biggest change for Welsh agriculture since the EU Common Agricultural Policy (CAP).  Now that we’ve formally left the EU, we no longer have the certainty provided by the seven year CAP budgetary periods and will now rely entirely on EU CAP replacement funds from the UK Government and subsequently the Welsh Government’s budget allocations for rural affairs.

Between 2019 and 2025, Welsh agriculture will have received around £250 million less in funding than what we could have expected had the UK remained within the EU.  This was a result of accountancy tricks by the UK Treasury.  As a result, the Rural Affairs budget in Wales has been impacted and the Welsh Government also chose to further reduce the available funding despite the fact that the rural affairs budget represents just 2% of the overall Welsh Government budget.

The SFS will replace all forms of financial support that farmers currently receive and the overall budget must reflect this.  Annual EU CAP legacy funding allocated to Welsh agriculture would now total around £450 million when taking into account inflation since 2013 when the 2014-2020 EU CAP budget was allocated.  The Welsh Government must demand from Westminster and provide to the agricultural community the funding support that would have been available to the sector had we remained within the EU.

PAYMENT METHODOLOGY

Since the initial consultation in 2018, the Welsh Government has made assurances that payments under the SFS would go beyond income foregone and costs incurred and properly reward farmers for carrying out various actions and providing environmental goods alongside producing sustainable food.  The current proposals suggest that payment rates will be calculated using costs incurred and income foregone with an additional ‘social value’ payment.

The Universal Baseline Payment must provide long-term stability for farming businesses and the wider rural economy that relies on agriculture.  It must also provide a meaningful income stream for farming businesses which properly rewards farmers for undertaking Universal Actions and compensates for the loss of the BPS.  The payment rates must also reflect the environmental work farmers throughout Wales have undertaken for decades and recognise the innumerable social and cultural contributions farming makes to rural communities.

It is also vital that the ‘social value’ payment does not result in a postcode lottery whereby some farm businesses receive higher payments than others for undertaking the same actions in different areas of Wales.

FOOD PRODUCTION

Our susceptibility to global events that are beyond our control has rarely been exposed so starkly as during the past three years.  The Covid-19 pandemic and the conflict in Ukraine have demonstrated the volatility of global supply chains and our reliance on imports of key commodities such as oil and gas.

We have witnessed how such events can cause seismic shifts in global supplies of food, fertiliser and fuel.  With the world’s population predicted to reach 9 billion people by 2050, the SFS must underpin the supply of high quality food produced by family farms in Wales.  We cannot and should not reduce our ability to be more self-sufficient in terms of food production in such an uncertain world.

ACCESSIBILITY

Achieving the Sustainable Land Management objectives outlined in the Agriculture (Wales) Act relies almost entirely on the uptake of the SFS by all active farmers in Wales.  As such, the scheme must be accessible and provide equal rights to all active farmers.  A flexible approach is required which takes into account all sectors and farm types.

The Welsh Government must ensure all Universal Actions and Scheme Rules are accessible and achievable by all and do not represent barriers to scheme entry.  The 10% tree cover requirement, for example, represents a major barrier to scheme entry and will result in a significant reduction in farm output and land value.

The Welsh Government must also recognise the amount of time and effort involved in undertaking all Universal Actions and complying with the scheme requirements.  This will be a major factor when farmers consider whether entering the SFS would be financially viable for their business.  The practicality and relevance of the proposed Universal Actions must be considered.  For instance, the expectation for every farm business in the scheme to complete a minimum of 6 CPD modules per year regardless of farm size or output seems typical of a proposal dreamt-up in a comfortable office with little or no regard to the realities of farming on a day-to-day basis.

MODELLING

The Welsh Government's own modelling assessment on various payment rates suggests a reduction in Farm Business Income (FBI) of up to £199 million, and a £125 million reduction in farm outputs.  It suggests that ‘all farms represent a reduction in the net value of support payments relative to under the BPS.’  It also predicts a reduction of 122,000 livestock units in Wales and 11% less on-farm labour requirements.  These figures are seriously concerning being based as they are on the Welsh Government’s own impact assessment of the proposed SFS scheme.

The FUW recently published a report entitled “The Role of Farm Support in Wales’ Livestock Supply Chains”.  This report models how much more profitable Welsh farm businesses would need to become on a per head or per hectare basis, or how much they would need to reduce their expenditure across key input areas in order to maintain current profit levels if direct farm support was cut by half or removed altogether.  The calculations are chilling and hugely concerning.

For the scenario where direct support is reduced by 50%, a required increased profit per ewe of between £18.09 (hill cattle and sheep farms) and £24.06 (lowland cattle and sheep farms) coupled with an increased profit per cow of between £120.63 (hill cattle and sheep farms) and £160.39 (lowland cattle and sheep farms) is required to maintain overall farm profits.

Lowland cattle and sheep farms would have to increase their profits received per hectare by £88 in order to maintain farm income for the scenario whereby BPS payments are cut by 50%.  This increases to £176 for the scenario whereby BPS payments are cut by 100%.

The results also highlight the significant savings that would have to be made for all farm types if farm profits were maintained purely by proportionally reducing expenditure across key inputs.  For example, for all 8,937 farms included in the FBS data set we would see a total reduction of £12.15 million in veterinary and medicine expenditure.  However, the total expenditure in that category is estimated to be £34.61 million for all FBS farms therefore the maximum possible reductions could be far greater whereby reductions in expenditure are not applied proportionately across key inputs.

Above all else, these results highlight the impacts for the wider rural economy and the potential impacts on businesses such as veterinary practices, agricultural merchants, garages and so forth.  Such impacts would have clear consequences for rural employment and would extend to those businesses that are not necessarily regarded as agricultural, but which rely directly or indirectly on farms for a proportion of their income.

OTHER CONSIDERATIONS

·      When responding to the consultation, please consider the impacts of either, i) entering the SFS in its current form, or ii) ceasing to receive any financial support on;

·      your business and level of production

·      labour requirements

·      contributions to the local community (social, culture and language)

·      amount of money spent with how many rural businesses

·      any other business enterprises (diversified income)

Please complete the form including your full address and postcode. Clicking submit will send your respond straight to the Welsh Government.