WELSH Government figures show how farm incomes in Wales for 2020-21 were forecast to have increased for cattle and sheep farms in both less favoured areas (LFA) and in lowland areas in Wales against a backdrop of change and instability caused by Brexit and the pandemic.

But this period, of course, was not affected by the dramatic increases in the cost of key farm inputs such as feed stuffs, fuel and fertiliser which is now taking its toll on business turn-over.

The annual ‘Forecast of Farm Incomes in Wales’ publication, released by the Welsh Government, provides insight into long-term trends within farm incomes in Wales.

It reveals that the average business income for a cattle and sheep farm in LFA was forecast to have increased by 32 per cent on the year to £29,900 per farm; an increase for a second consecutive year, and the highest average recorded since 2011/12.

READ MORE: Shepherd Dan Jones discusses life and farming on the Great Orme

Hybu Cig Cymru – Meat Promotion Wales’ (HCC) data analyst Glesni Phillips focuses on this forecast in her latest monthly market bulletin, now available to download from the HCC website.

She said: “A steady rise in farm income is welcome news and came as a result of increased farm output, combined with similar year-on-year business costs.

“It was also good to see an increase of 38 per cent in the forecasted income for the average lowland cattle and sheep farm in Wales during the same period, following two years of income decreases.

"At the same time, a high proportion – 12.5 per cent - of farms recorded an income of at least £50,000, whilst 10 per cent of farms recorded a negative income during the year.

“This spread of varying incomes is to be expected, and is the same in every industry.

"However, predicting and managing farm incomes can be quite a challenge for red meat producers as there is always such volatility within the sector which can change a business’ profit margins.”

This financial year looks set to be particularly volatile with rising costs and inflation already affecting all farming businesses.

READ MORE: Dairy farms have important role in sustainable food production, says Anglesey farmer

Glesni added: “Significant price hikes in fuel and fertiliser, and disruption to trade flows of some goods as a result of Russia’s invasion of Ukraine will inevitably put pressure on the profitability of the red meat market.

"In addition, there are early signs of changes in consumer behaviour with a 10 per cent drop in the volume of grocery sales during the four weeks ending March 20 (Kantar).

“At the moment, however, farmgate prices remain firm. Prime cattle average deadweight prices and cull cow prices have been above historical averages, with prime lamb and cull ewe averages remaining steady over the last few weeks as consumers celebrated Easter and Ramadan. But as inflation continues to rise, it is difficult to predict whether this will continue.”

The full analysis included in the Market Bulletin can be found online at https://meatpromotion.wales/en/news-industry-info/market-bulletin