Diversification and resilience of Welsh farming: Prospects after Brexit

The Welsh Government has presented proposals for future agricultural support after UK membership of the EU ends. These consultations provide for a transition to funding farmers as managers of a sustainable countryside environment for the benefit of wider society, beyond food production. Farm business resilience and the delivery of these wider ‘public goods’ will be a reflection of the strategic and operational stances taken by individual farming businesses.
However, farming businesses in Wales face a number of hurdles, such as poor upland land quality, and remoteness from centres of population. These factors severely restrict business resilience and revenue diversification strategies, such as improving farm efficiency, developing non-food and non-crop revenues, participation in agri-environmental schemes, or access to rural development funding and business support. When compared with England, Welsh farms are also smaller and less well resourced. This briefing provides an assessment of these issues, drawing on analysis of data from the annual England and Wales Farm Business Surveys, and provides an evaluation of business diversification as an option for Welsh farming policy post-Brexit.
The proportion of Welsh farmland which is classified as disadvantaged is very high, even in comparison to regions with similar landscape on the western side of Great Britain. Average farmer age is rising, and Wales lags in terms of the proportion of farmers that have further or higher educational qualifications. The proportion of farmers under the age of 45 in Wales has fallen from 14% to under 10% between 2010 and 2017. All these factors compound prospects for transition within the industry. One particular feature of current farming in Wales is the lower average levels of acquired funding from EU Pillar 2 agri-environmental schemes. In 2017 the average level of funding in Wales for farms applying for funding was £10,300, whereas in England the average was £13,600. Both countries have experienced a fall in take-up rates of Pillar 2 support, despite maximum permitted budget modulation in Wales.
Diversification activity on Welsh farms has grown over the past decade. However, diversification revenues on Welsh farms still represent on average only 3.4% of total farm revenues in 2017, compared to an average of 7.7% in England. In summary the proportion of total farm business revenue coming from non-food or non-crop diversification activity remains low. This suggests that reliance on increased farm diversification to build resilience in Wales remains an optimistic strategy. In the worst case post-Brexit scenario diversification revenues might need to increase up to tenfold to replace other lost revenues.
In summary, farming household resilience relies, not only on food and diversified non-food income streams, but also on other income streams which are external to the business. A range of actions might support the continued growth in diversified income. While these might allow farms to contribute to providing wider social and environmental public goods, they may not support farming community identity and build economically sustainable farm businesses.