Welsh Farm Incomes

The Welsh Government has released forecasts for farm incomes in Wales for the period April 2015 to March 2016.  The final figures are expected in November 2016.  Farm Business Income for all farm types shows a decrease compared to 2014-2015.  The average for the combined ‘all farm types’ is forecast to decrease by nearly £5,000 (16%) to £24,500.  Unsurprisingly, Dairy farms see the largest fall by 40%, to £42,000.  Even so the average for dairy farms is still the highest out of all the sectors.  The average Farm Business Income on LFA cattle and sheep farms and lowland cattle and sheep farms is forecast to fall by around 4% and 8% to £22,500 and £25,500 respectively compared to the previous period. 

Although input costs are forecast to decline due to a fall in feed and fuel costs, these are more than offset by the decline in output prices, particularly in the dairy sector, where the milk price has fallen considerably over the period.  Livestock prices have also declined as well as support payments for many as the new Basic Payment Scheme is introduced. 

Farm Business Income represents the return to all unpaid labour (farmers, spouses, non principle partners, family workers and others with an entrepreneurial interest in the farm business and to all their capital invested in the farm business including land and farm buildings.  It is the Government’s preferred measure of income.  

Another income measure is sometimes used, Net Farm Income (NFI).  This is defined as the return to the principle farmer and his spouse for their manual and managerial labour and on the tenant-type capital of the business.  It makes a notional allowance for rent if the farmer is an owner occupier and for depreciation of assets.  Interest payments, net of interest received, are included as a cost as is hired labour.  Valuation changes are excluded.  The Welsh Government has also released its forecast for NFI.  The average for ‘all farm types’ is forecast to decline by about £4,500 (25%) to £13,000.  Once again dairy shows the biggest fall by 47% to £30,500.  LFA cattle and sheep farms and lowland cattle and sheep farms are forecast to decline by 4% and 11% to £11,000 and £15,500 respectively.