Study of Welsh Farm Finances Reveals Bigger isn’t Always Better


A new analysis of farm business data from over 1,500 sheep and suckler cow enterprises in Wales has suggested that there is a future for the family farm if the business is managed effectively and costs kept tightly under control.

Data received from farmers as part of the Red Meat Benchmarking project has been independently interpreted and the results presented in a detailed report which is now available to download from the Hybu Cig Cymru – Meat Promotion Wales (HCC) website.

The project – a £2.15 million initiative supported by the Welsh Government EU Transition Fund, delivered by HCC with support from Farming Connect – has highlighted the diversity within the Welsh sheep and suckler cow sectors. It also points towards the significant range in financial performance within red meat businesses in Wales.

“The top performing enterprises generate a financially viable, and in some cases, very profitable business,” said HCC’s John Richards, Industry Development and Relations Manager. “These businesses, however, weren’t necessarily the largest in terms of scale or size. What the data analysis has evidenced is the importance of building a business based on solid foundations before attempting to grow and expand.

“The data shows that top performers keep their overhead costs considerably lower per breeding animal than the farms in the bottom tier. Figures from the sheep enterprises show that top third performers have almost half the amount of overhead costs when compared to the bottom third. Producers are encouraged to review each overhead cost, and all business costs in general, however large or small, to keep them low.”

The project has, however, highlighted the current challenge of making money from sheep, and from suckler cow enterprises in particular, which corresponds with the Welsh Government’s Farm Business survey statistics and correlates with data from the rest of the UK.

John Richards added:

“A prolonged period of political turmoil in Westminster and Brexit uncertainty has been, and continues to be a huge hindrance for agriculture; it’s a challenging time. However, the analysis did not identify one major problem within the sector, but a number of smaller issues that can be tackled for positive effects on farming businesses.

“Farmers should aim to effectively utilise all the resources available to them, they need to be stocking their farm to an optimal level to maximise the output from the land.

“There is also a need to focus on detail. The value of benchmarking and the savings that can be made by keeping a close eye on farm finances is evident from this work. Measuring an enterprise’s performance by taking time out to calculate the returns is fundamental for a well-managed, profitable and sustainable business.”

Minister for Environment, Energy and Rural Affairs, Lesley Griffiths, said:

“This report provides farmers with essential sector-level detail of how and why performance varies across farming businesses in Wales. Whatever the outcome of the Brexit process, the changing market conditions in which farmers operate mean they must adapt now in order for their businesses to thrive in the future. The information compiled in this report will be an invaluable guide to some of the options available to reduce operating costs.

“The report shows there are farming businesses across Wales of all sizes who are able to generate a profit at the same time as upholding the highest environmental and animal welfare standards. We know turning a profit from sheep and suckler cows is not easy, but with the right planning and with the support available from Farming Connect and HCC it is possible to run a successful farming business that delivers benefits for the environment and the economy of Wales.”

A summary of the findings, which includes a number of practical key considerations for farmers to contemplate, can also be downloaded from the HCC website.