The Farmers’ Union of Wales (FUW) has raised concerns about cuts to the Welsh government’s rural affairs budget and potential further losses if Rural Development Programme funds are not spent.

The union today (Friday, December 16) said that the Welsh government’s latest draft budget, which was published on December 13, shows significant differences in budget amounts and allocations since the indicative budget was published in March.

While the UK government’s autumn statement resulted in a further £666 million in funding for the Welsh government in 2023-24, the Welsh government proposes cutting its rural affairs budget by nearly nine million pounds, the union said.

Speaking in response to the announcement, FUW President Glyn Roberts said: “The fact that the budget allocation for rural affairs has decreased by a considerable amount in the draft budget whilst the overall Welsh budget has increased in nominal terms represents a major concern for our members.

“We fully appreciate that the increase in Wales’ block grant represents a real terms fall in funding due to the high rate of inflation – but the high rate of inflation also means that the nominal cut of almost £9 million to the rural affairs budget represents an even larger cut in real terms.”

Roberts said the decision was extremely concerning given the important work undertaken by the Welsh government’s rural affairs department at a time of major transitions and pressures for farmers and the rural communities they support.

FUW Council members also expressed their concerns that if Rural Development Programme funding was not spent by June 2023, Wales would have to return monies to the European Union (EU).

“According to the latest figures, in September 2022 20% of Wales’ RDP budget – around £181 million – remained unspent,” Roberts said.

“£103 million of this is made up of EU funds, including £45 million taken from farm payments through the 15% Pillar 1 to Pillar 2 Transfer mechanism.

“Our understanding is that all unspent funds that derive from the EU must be returned if they have not been spent by June 2022, including money taken from farmers through the 15% Pillar Transfer.”

Basic Payment Scheme (BPS)

Despite concerns about cuts to the Welsh rural affairs budget, FUW Council members welcomed the Welsh government’s commitment to maintain a total budget of £238m for direct payments in 2023 and 2024.

The Welsh government announced the commitment to the BPS budget yesterday (Thursday, December 15), with the National Farmers’ Union of Wales (NFU Cymru) saying it “warmly welcomed” the announcement.

Roberts said that the Welsh government’s commitment stood in stark contrast to the situation in England where such payments have been cut by an average of more than 20% in 2022, and are due to be further cut in 2023.

“However, it must be noted that the £238 million represents a significant real terms fall for Welsh farms given the current rate of inflation – especially when we consider the latest figures show the price index for agricultural inputs increased by 28.3% in the 12 months to October while increases in farmgate prices came nowhere close to this figure,” he said.