NFU Cymru is calling on governments to provide long-term funding arrangements that accurately reflect the modern-day cost to Welsh farmers of producing food, enhancing the environment and combatting climate change.

That was the key message from the union’s President Aled Jones when he opened the third NFU Cymru/Wynnstay Sustainable Farming Conference, which took place on Bodwi farm, Llŷn Peninsula last week.

During his speech, Mr Jones highlighted the real terms deficit between farming support settlements and rising inflation over the last decade, and the destabilising impact this is having on farm business viability.

While Mr Jones commended Welsh Government for its commitment to maintaining the Basic Payment Scheme (BPS) budget for 2023, and with no respite in the challenges Welsh farming faces, Mr Jones stressed the absolute importance of maintaining the BPS budget for 2024 at current levels.

He warned that in the context of agri-inflation having risen 40 per cent since 2020, future settlements that do not recognise the industry’s escalating costs will challenge farming’s ability to meet its food, environment and climate ambitions.

Mr Jones said: “The BPS is absolutely imperative, not only for Welsh farm businesses, but for the vitality of our rural communities, the wider supply chain and for our environment. Farmers can only deliver for the environment from a position of farm business viability.

“The entire rural affairs budget, including agriculture, currently makes up just two per cent of Welsh Government spending. In 2022, farming delivered a gross output of £2.1 billion. We can say confidently, therefore, there is a nine to one return for every BPS pound invested in Welsh farming. By any measure farming delivers excellent value for money.

“It is also important to recognise budgets for agriculture remain at levels established via the Common Agricultural Policy (CAP) a decade or so ago. The Bank of England inflation calculator clearly shows the BPS budget would need to increase by £79 million – from £238m to £317m – just to stand still with inflation over the past decade. Replacement CAP funds – Pillar 1 Direct Payments and Pillar 2 – need to increase to £500m just to keep pace.

“In this context, ‘not a penny less’ funding for farming is not a sustainable position. NFU Cymru and Welsh Government have significant ambitions for farming and the role we can play delivering climate-friendly food production whilst enhancing our environment. But with escalating costs, tighter margins and lower returns from the marketplace, more needs to be done to understand the cost of delivering on those ambitions.

“Our current and future governments in both Cardiff Bay and Westminster need to deliver on a long-term funding arrangement that properly reflects the funding required to deliver on our food, environment and climate ambitions.”