Welsh Farm Business Survey reveals wide gaps in income

The wide gaps between Wales’ best- and worst-performing farms have been highlighted in the latest set of income figures, revealed in the Welsh Farm Business Survey.

According to 2021-22 data, dairy farms in the top third for performance captured a net margin of 12p/litre more than those in the bottom third.

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There is similar variability among lamb and beef producers; at the top end of the scale, lamb producers made a profit of 87p/kg while those at the bottom lost 55p/kg and, in suckler beef, income ranged from a profit of 25p/kg to a loss of 109p/kg.

Meanwhile, the top third of hill cattle and sheep farms are making a profit of £543/ha – more than double the average, who achieved £258/ha.

None of these figures take the farmer’s own labour cost into account though, creating a “false” picture of the economics of farm production, warns survey director Tony O’Regan.

“The dairy sector best illustrates this since labour and pension costs alone can add more than 9p/litre, which then pushes the costs of production for the top third to 31p/litre and the bottom third closer to 40p/litre,” he pointed out.

Support dependency 

Aberystwyth University conducted the 2021-22 survey across a random sample of just over 500 Welsh farms.

The data shows how reliant some farming systems are on government support payments and non-farming income.

For upland cattle and sheep farms, the Basic Payment Scheme, other subsidies, diversified income, and miscellaneous income such as rents and wayleaves, contributed about 26% to their total income (outputs) on average, and 108% of profits.

Mr O’Regan said this threw into doubt how many businesses could be profitable without government support.

“With these levels of dependency, it is difficult to see how many Welsh farms with limited options for changing farming enterprises and/or system can be profitable without relying on non-farming income and Welsh government support payments,” he said.

The survey showed that 2021-22 had been a year of ups and downs for different sectors.

Finished cattle prices had risen steadily throughout the season due to tight supplies and cull and store cattle prices were very good, too.

However, increased culling put pressure on heifers’ prices, while high input costs had an impact on profit margins.

Milk prices nudged upwards throughout the year – up by 15% by the end of the year – but higher input costs again swallowed up much of that increase.