Exchange rate beefs up livestock income
The dramatic fall in the value of the pound in the wake of last June’s EU referendum has helped boost incomes on Welsh cattle and sheep farms over the past 12 months.
But dairy holdings saw a 25% fall in average incomes during a year when milk prices plummeted to new lows, giving Welsh producers their lowest returns for 13 years.
Latest Welsh Government figures show that average farm business incomes across all farm types are expected to be up by 16% to £25,500 for the year up to March.
This is only a provisional estimate, with the final figure due to be confirmed in the autumn.
The returns, based on the Farm Business Survey, reveal that average incomes on lowland cattle and sheep farms climbed 34% to £22,000 in the year to March.
For upland cattle and sheep farms, the rise was slightly more muted, at 26%. Average incomes in this sector now stood at £27,500, for the second year in succession, exceeding the lowlands figure and boosted by the exchange rate and firmer prices for finished lambs in the latter part of the year.
NFU Cymru said the statistics revealed a “mixed picture” for Welsh farming but union president Stephen James was pleased to see a better year for beef and sheep.
He added: “It must be remembered that these increases are from a pretty low baseline. The increased income is in a large part driven by the fall in the value of the pound since the EU referendum, which has enhanced the value of the basic payment and has led to better marketplace returns.
“Unfortunately, these are not a sustainable basis for the viability of any business going forward. What we need are adequate returns from the marketplace to ensure the viability of each and every farm business.
“These figures also serve to illustrate quite how dependant farmers in Wales are on the basic payment for a very significant proportion of their income.”
Mr James said farmers should not have to rely on currency fluctuations to boost incomes, nor should the Welsh Government impose costly and unnecessary regulation such as additional NVZ (nitrate vulnerable zone) designations.
Urging the Welsh Government to “exercise the utmost restraint”, he said: “This will inevitably add cost to many farming businesses and could indeed represent the final straw for some, particularly in the dairy sector.”
Mr James addded: “I remain optimistic for the long-term future of Welsh agriculture. We have both skilled farmers and climate here in Wales that should allow us to rise to the challenge of producing more food, whilst protecting and enhancing the environment and meeting our climate change obligations.
“There is also a huge role for UK Government to play in ensuring that the unique needs of Welsh agriculture are fully taken into account in the Brexit negotiations.”
Last year’s sharp dip in dairy incomes, to £24,500, followed a similar fall the previous year, emphasising the depth of the crisis facing the sector last summer.
In recent months farmgate milk prices have begun climbing again, but the estimated income figures for the year are still the worst since 2003-04.
Last year’s average dairy income was less than a third of what milk producers were getting in 2012-13. And in the past five years, up to 2015-16, the average milk price paid to farmers in Wales was generally 1p to 2p per litre lower than for the UK as a whole.
Plaid’s Shadow Rural Affairs Secretary Simon Thomas called on the UK and Welsh governments to commit to future funding for agriculture and the rural economy.
He said: “We need leadership from both governments in London and Cardiff Bay. All types of farm businesses in Wales are facing a period of uncertainty following the decision to leave the European Union. It is crucial that Wales’ food and drink producers are represented in the UK Government’s trade negotiations.”