Welsh Farm incomes are increasing
In the year to March 2022 Welsh farm incomes rose to a new overall average of £38,600 - up nearly a third on levels reported in the previous twelve months.
The detailed information is contained in the latest release of the annual 'Forecast of Farm Incomes in Wales' publication released by the Welsh Government, which provides an insight into long-term trends in farm incomes and market performance. The current Hybu Cig Cymru - Meat Promotion Wales (HCC) monthly Market Bulletin looks into the results of the 2021-22 financial year along with the impacts of inflation on the sector.
"It must be remembered that the period of the report (2021-22) largely predates the dramatically different business climate following the surge in costs that came with rising inflation and the war in Ukraine that hit many farm businesses in the current financial year (2022-23)," said Glesni Phillips, HCC’s Intelligence, Analysis and Business Insight Executive.
She explained that the report featured mean averages of farm income and often variations for individual farms could be influenced by a huge range of factors – such as physical location, economic size of the farm, production costs, whether the business is investing, and the skill set of the business person.
"Therefore, the farm income averages discussed will only provide an indication of the sector’s performance, as variations will exist at farm level," said Glesni. "The information shows that in 2021-22, the average business income for a cattle and sheep farm in less favoured areas (LFA) of Wales, which covers many landscapes on which Welsh producers farm, increased by 29 per cent on the year. It is the highest average recorded since 2011-12, and an increase for a third consecutive year."
The average income for a lowland cattle and sheep farm in Wales was £26,500 for 2021-22 – a 16 per cent increase on the previous year’s figure. This is similar to the average recorded in 2017-18, and represents a welcome recovery following a low in 2018-19. The percentage increase is more modest in comparison to LFA farms mainly due to the rise in input costs having greater impact on lowland farms, where costs are up 17 per cent on the year.
Rises in LFA incomes were attributed to increased farm output where business costs increased at a slightly lower rate. While there are notable differences between farms, all have recorded a year-on-year increase in average incomes whilst both cattle and sheep farmgate prices were unusually strong during 2021.
"The year 2022 was one of extreme highs in terms of farm input costs, and so the next release of the ‘Forecast of Farm Incomes in Wales’ publication for the 2022-23 financial year will undoubtedly reflect this," said Glesni. "Although the rate of increase may have steadied, the cost of many key farm inputs remains at high levels when compared to historical averages.
"Alongside soaring on-farm costs, the cost-of-living crisis is putting pressure on household expenditure and in turn impacting on consumer shopping habits, so it is clear that the red meat sector going forward is faced with a set of difficult challenges," said Glesni.
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