Last week, the Welsh Government published the evidence base underpinning the introduction of the Sustainable Farming Scheme (SFS), including the Business Case, Integrated Impact Assessment and an updated economic analysis.

These documents examine the potential economic, environmental and social outcomes of the Scheme. Through the work of the Ministerial Roundtable, some of the findings have helped shape the final details and indicative payment rates of the Scheme.

According to the documents, across 15,555 full-time and part-time farms in Wales, the Universal Actions could result, in a worst-case scenario, in a 5% reduction in Grazing Livestock Units, a loss of 1,163 Standard Labour Requirements (SLRs) and a £76.3 million drop in Farm Business Income-equivalent to around £4,900 per farm.

Initially, it appears that the possible economic impacts on grazing livestock units, labour requirements, and farm business income have roughly halved compared to analyses of earlier versions of the SFS. While this reflects the improvements made to the Scheme following engagement and lobbying efforts, the assessments still indicate a concerning and negative impact on family farms across Wales.

The SFS places greater demands on farming businesses - environmentally and socially - yet we are still expected to operate within a twelve-year-old budget settlement that represents a significant real-terms cut in funding. Welsh farmers should not be disadvantaged for transitioning to a new support system that demands more from them. For this reason, the Farmers’ Union of Wales are calling on the next Welsh Government to increase the base-level funding of £238 million for the Universal Layer of the SFS by an amount that fully mitigates the estimated economic impacts and supports the Scheme’s ambitions. Based on the Government’s own assessments, this would mean an increase of at least £76 million.

Despite our concerns, we welcome the publication of these assessments and the transparency shown by the Welsh Government. This approach stands in contrast to the scattered and speculative handling of similar reforms in England. While the revised analysis demonstrates progress, the potential impacts remain worrying for individual farm businesses and the wider agricultural supply chain. It is vital that we maintain the critical mass of livestock and avoid further reductions at all costs.

The Farmers' Union of Wales will continue to work closely with both the current and future Welsh Government to refine the Sustainable Farming Scheme, ensuring that the additional actions expected of Welsh farmers are properly valued and fairly rewarded.