Welsh farming leaders respond to new SFS assessment

Today, 30th September, the Welsh Government published its evidence base for the Sustainable Farming Scheme (SFS). These documents consider the potential economic, environmental and social outcomes of the scheme. 

Economic modelling undertaken for the Welsh Government on the SFS universal actions estimates reductions of around 5% in livestock numbers, 4% in labour on farms and 16% in farm business income across 15,555 full-time and part-time farms in Wales.  

While this latest independent report estimates the level of the negative impacts of the revised SFS proposals has reduced by some margin in comparison to the “shocking scenario” anticipated in the previous accompanying impact assessment, Welsh farming union NFU Cymru said that the new estimated outcomes remain “extremely concerning”. 

The union explained that this work is imperative to ensure that its ambition for the continued growth of the Welsh food and farming sector is met. 

‘There is more work to do to support Welsh farming’

NFU Cymru president Aled Jones said that the Welsh Government must act on the newly published information not only in the interests of Welsh farming businesses but also rural communities and those whose jobs in Wales’ £10 billion food and drink industry are reliant on a thriving agricultural sector. 

The Welsh Government launched its revised SFS back in July this year. NFU Cymru said it supports the general framework of the scheme, including the weighting of funding towards the universal layer, along with the inclusion of a social value payment.  

The union stressed, however, that without the publication of a full impact assessment and modelling, it was impossible to understand the impact on Welsh farming businesses and the wider supply chain.  

Based on the information published today, the union is repeating its calls for the government to take action to counter those negative effects on income, jobs and production. 

NFU Cymru president Aled Jones said: “The economic modelling estimates a reduction in the number of jobs, income and production when compared to the previous iteration of the modelling, however, from our perspective, the numbers projected this time around remain extremely concerning.  

“There is, therefore, more work to do to support Welsh farming, as well as the businesses and communities that we underpin, alongside securing the critical mass of production from our farms that supports the £10 billion food sector in Wales.” 

‘Move to new scheme should not leave farmers financially worse off’

Mr Jones highlighted that the Welsh Government SFS announcement ahead of the summer recess revealed many positive changes to the SFS scheme design, including the important addition of the social value payment NFU Cymru had lobbied for.

He continued: “NFU Cymru is looking to government to commit to use the information published today to review and address elements that negatively impact on income, jobs and production levels. We highlight the need for Welsh Government to urgently work with the farming industry to bring forward proposals under the optional layer of the SFS that support farm efficiency, productivity and increase profitability and the sustainability of farming businesses. 

“We have always maintained that the SFS should provide at least the same level of economic stability to Welsh farming, the supply chain and our rural communities as the Basic Payment Scheme (BPS) does currently. A move to a new scheme should not leave farmers financially worse off. We are clear that a properly resourced universal layer and social value payment must, therefore, continue to be at the heart of the SFS both now and in the future. 

“We look to the next Welsh Government for an ongoing commitment to maintain, as a minimum, the current 70:30 budget split between the universal and optional /collaborative layers,” the NFU Cymru president added. 

Looking ahead, Mr Jones said that the next government should increase this budget to a minimum of £500 million to take account of inflation and to help meet the shared ambitions for food, climate, environment, communities and language. 

“The removal of the well-documented 10% tree cover requirement has been a significant step forward. The scheme requirement for 10% habitat remains an area that we believe needs to be kept under review, both in terms of the conditions attached to the habitat classifications and through an expansion of the range of temporary habitat options available to all farming businesses.”

Mr Jones said that the  new scheme is a very significant change for farmers.

“We remain concerned about the level of detail, constraints, administration, costs and bureaucracy attached to the SFS which is significant and far greater than anything seen before. As the scheme reaches implementation stage, we are seeking reassurances from Welsh Government that Rural Payments Wales (RPW) will adopt an advisory-led approach to delivery and seek to minimise the stress and anxiety that farmers experience at inspection and the disproportionate system of penalties. 

“More broadly, NFU Cymru continues to lobby for an independent review group to consider the cumulative burden of regulation, red tape and bureaucracy facing the agricultural sector. Such a review needs to be ambitious and all-encompassing, encouraging and supporting an enabling policy, regulatory and planning framework for Welsh farming. 

“NFU Cymru will now take the time to further examine the new evidence base. In the coming weeks, we will be meeting the deputy first minister to raise the issues we have identified. We will continue to do all we can to ensure that Welsh Government’s agricultural policy provides the stability needed for farming families so they can continue to provide high quality food, continue to deliver for our environment and underpin our rural communities, culture and Welsh language,” he concluded. 

NFU Cymru is urging all farmers to consider the revised SFS and payment rates by utilising key tools such as the ‘ready reckoner’, as well as completing the data confirmation exercise which remains open until 31st October.  

More supporting information, as well as dates for NFU Cymru’s remaining SFS surgeries being held across Wales, can be found on the NFU Cymru website. 

‘Future of farming in Wales lies in farmers working with nature’

Rhys Evans, Nature Friendly Farming Network (NFFN) Cymru manager, said that it is optimistic to see that the SFS is now both stronger and more accessible than it was 12 months ago. 

“We would encourage all farmers in Wales to understand what the scheme means for them and what payments they can expect to receive in 2026. However, it is concerning that there is still a lack of detail about the optional and collaborative layers of the SFS, including payment rates, which will be vital to enabling a nature-friendly farming transition. The Welsh Government must introduce these more ambitious elements of the SFS as soon as possible. 
 
“There also seems to be an assumption that increasing habitat cover will automatically lead to a reduction in livestock numbers. Yet many habitats, such as pastureland, herbal leys and agroforestry, can be successfully integrated into nature-friendly livestock farming systems.  

“It is also puzzling that this reduction is based on 2019 data, when livestock numbers have already fallen since then, meaning some of the estimated reductions have already occurred. In an industry evolving as quickly as farming, the government must work with the most up-to-date picture possible.”

Mr Evans said that the future of farming in Wales lies in farmers working with nature to produce food in ways that deliver both environmental and socio-economic benefits.

“To achieve this, we need a properly funded, ambitious financial package from the Welsh Government that matches the scale of the challenges,” he concluded. 

‘Possible impacts remain concerning’

Responding to today’s announcement, Farmers’ Union of Wales (FUW) president Ian Rickman said: “Due to the nature of the Sustainable Farming Scheme, the documents published today are comprehensive and complex. It will therefore take some time for us to fully understand the extent of these assessments and what this could mean for our members.

“Initially, it seems that the possible impacts on grazing livestock units, standard labour requirements and farm business income have roughly halved compared to previous economic analyses based on earlier versions of the scheme.

“However, these assessments continue to indicate a concerning negative impact on family farms across Wales. By design, the Sustainable Farming Scheme places greater demands on farming businesses and yet we are still expected to work within the bounds of a twelve-year-old budget settlement that represents a substantial real-terms cut in funding.”

He added that the Welsh farmers should not be disadvantaged for transitioning to a new system of support that places greater societal and environmental demands on their businesses.

“This is why we are calling on the next Welsh Government to increase the base-level funding of £238 million for the universal layer of the Sustainable Farming Scheme by an amount that fully mitigates the estimated economic impacts shown by the impact assessments and matches the policy ambitions of the Welsh Government. Based on the Welsh Government’s own assessments, this represents an increase of at least £76 million.

“Nevertheless, we welcome the fact that these assessments have been commissioned and published today. These have and will continue to inform the development of the Sustainable Farming Scheme here in Wales, contrary to the scattered and speculative approach taken on the other side of Offa’s Dyke.

“While the revised economic analysis reflects our lobbying efforts to improve the scheme over recent years, the possible impacts remain concerning, both from an individual farm business and an agricultural supply chain perspective. It is crucial that the critical mass of livestock is maintained and that any further reductions are avoided at all costs,” he concluded.

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