Welsh farm incomes see ten year high during 2021-2022

Sheep and cattle farms across Wales have seen a ten-year high increase in business incomes, according to new Welsh government data.

But the situation will have changed markedly in recent months, with significant increases in costs for farmers illustrating the potential volatility of the sector.

In the year to March 2022, data shows that 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.

The report provides an insight into long-term trends in farm incomes and market performance.

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% 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 percent increase on the previous year’s figure.

This is similar to the average recorded in 2017-18, and represents a recovery following a low in 2018-2019.

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% 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.

Responding to the report, Hybu Cig Cymru - Meat Promotion Wales (HCC) said it must be remembered that the data was before the start of the war in Ukraine.

“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," said Glesni Phillips, of HCC.

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.

These include 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 Ms Phillips.

She added: “The year 2022 was one of extreme highs in terms of farm input costs, and so the next release for the 2022-23 financial year will undoubtedly reflect this."

“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."