Supporting Evidence - Key facts and figures
10 May 2017
Welsh Government
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Index
Page Agriculture Key Income and profitability Diversification and household income Sector Specific Focus Dairy Red Meat Sheep Beef Economics/Finance Common Agricultural Policy Pillar 1 Pillar 2 Wider benefits to Wales Delivered by Agri-sector Environment and Service Delivery Culture and the Welsh Language Food and Drink Food and Farming ‘Priority Sector’ Food and Drink Manufacturing Meat and Meat Products Sub Sector Bakery Sub Sector Drinks Sub Sector Dairy and Eggs Sub Sector Grains and Starch Sub Sector Prepared Animal Feeds Sub Sector Fruit, Vegetables and Plants Sub Sector Seafood Sub Sector Oils and Fats Sub Sector Other Food Products Sub Sector Food and Drink Wholesale Sub Sector Food and Drink Retail Sub Sector Catering Sub Sector Animal Health and Welfare Framework Fisheries and Seafood Forestry and Timber Natural Resources Waste management Water Framework Directive Future Trends Report –Land Use and Natural Resources Access to Research and Development Resources Annexes
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EU Exit Evidence and Scenarios Working Group - Key facts and figures
Introduction
This document has been pulled together as a working document to support discussions and the work of the EU Exit Evidence and Scenarios Working Group. It is acknowledged that there are some gaps in this first iteration. It will be part of the role of this Working Group to identify where we can access further supporting evidence and data to support the EU Exit work.
EU Stakeholder Response Workshops 2016
In July 2016, following the UK’s vote to leave the European Union, stakeholders connected to the Environment and Rural Affairs (ERA) portfolio met for a round table meeting at the Royal Welsh Show. At this discussion, it was agreed that workshops should be held to look in more detail at the implications of Brexit – in particular the key risks, opportunities, and impact on the way forward – for the ERA portfolio.
As a consequence, Welsh Government organised a series of stakeholder workshops and – at the request of the roundtable delegates – commissioned independent consultants1 to facilitate the sessions and synthesise and report on the findings.
The Summary report is available at Annex 2.
Food and Farming
In the UK, Food and Drink manufacturing represents one sixth of UK manufacturing GVA and is the UK’s biggest manufacture sector by GVA.
Food and Farming became one of the nine priority sectors in Wales in 2011. 'The Welsh Food and Drink Skills Project', conducted in collaboration with the Sector Skills Councils and industry partners, indicates that the food and drink supply chain is important to the Welsh economy in terms of employment, income and the contribution it makes to tourism. The research estimates that the supply chain makes up approximately 18% of the total Welsh workforce, and generated over £6 billion in 2010, performing well in a challenging economic climate.
Key figures:
The GVA for Wales’ Food and Drink Manufacturing in 2014 was £1,355m, 2% of Wales’ GVA.
The GVA for Wales’ Agriculture in 2015 was £385m, 0.7% of Wales GVA. Gross Value Added from agriculture decreased by around £51 million (or 13%) to £355 million in 2016.
The value of agricultural gross output is estimated to have decreased by around £33 million (or 2%) between 2015 and 2016, to £1,447 million.
1 Miller Research (UK) Ltd. and Brook Lyndhurst Ltd.
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Total Income from Farming in Wales is estimated to have decreased to £157 million in 2016, a decline of around £20 million (or 12%).
160,000 were employed in 2014 in Wales’ post farm-gate food chain – manufacturing, wholesale, retail and catering.
58,000 were employed in agriculture in Wales in 2015, some 4.1% of employment.
There are 26,785 local business units in the food and drink supply chain.
Wales’ natural resources provide us with many economic, social and cultural benefits.
For example:
• 951 million litres of drinking water per day
• 1.5 million tonnes of green timber a year, making construction easier and cheaper
• £499.3 million from woodlands each year
• 14 million tonnes of aggregates per year, for construction and other uses
• 8,919 gigawatt hours of energy from renewable sources, and rising, creating a renewable energy industry that employs 2,000 people
• 410 million tonnes of carbon stored in soil to soak up emissions and protect against climate change
• £2,870 million in tourism to Wales
• 28% of adults meeting the recommended level of physical activity through outdoor pursuits
• £18.2 million in health benefits to people from walking the Wales Coast Path
• £840 million and 30,000 jobs from the historic environment sector
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Agriculture
Farming has a higher profile within Wales’ economy than is the case for the UK as a whole:
% UK % Wales as a % of UK population: 5 Wales as a % of UK land mass 9 % of land use in agriculture 78 70 % of employment in agriculture 4.1 1.4 GVA for agriculture 0.7 0.6 Wales as a % of UK’s permanent pasture 18 Wales as a % of UK’s under 5 years grassland 13 Wales as a % of UK’s farm woodland 7
Wales sheep flock as a % of the UK’s 29 Welsh milk production as a % (on average) of milk production 12 Wales dairy herd as a % of the UK’s 13 Wales beef herd as a % of the UK’s 11
The following table gives a broad indication of how the types of farming in Wales compare with the UK as a whole.
People, land and agriculture in Wales and the UK, 2015 Wales UK Wales share
General All land ('000 ha) 2,100 24,400 9% All people ('000) 3,100 64,600 5%
Land on farms ('000 ha) Permanent pasture 1,048 6,078 17% Rough grazing 257 3,801 7% Grass under 5 years 153 1,167 13% Crops and hort 87 4,893 2% Woodland and other 87 1,290 7% Total 1,631 17,229 9%
Livestock ('000 head) Sheep 9,739 33,337 29% Cattle 1,103 9,919 11% of which dairy cows 290 2,281 13% of which beef cows 214 1,957 11% Poultry 8,997 167,579 5% Pigs 28 4,739 1%
Source: Farming Facts and Figures, 2016 (page 5)
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1. Key income and profitability figures are:
Wales UK Wales as £m £m % of UK Gross agricultural output 1,495 23,852 6.26 GVA 385 8,495 4.53 Total income from farming 175 3,769 4.64
The average income figures are highly variable from year to year – as the chart shows for the dairy farms. Partly this reflects the true year on year variation but part is also because the estimates are based on a sample of 500 farms.
Another issue is that using the average income can conceal the variation between farms in a farm type. Chart 2 shows the share of farms within a farm type having various levels of Farm Business Income. This analysis is only currently available for the 2014-15 financial year.
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Share of farms by Farm Business Income on a farm and farm type, 2014-15 Farm income Lowland (£'000) Dairy LFA grazing grazing All farms Loss 11% 20% 17% 19% 0 to 10 8% 17% 15% 15% 10 to 25 6% 27% 22% 21% 25 to 50 19% 20% 32% 21% 50 to 75 11% 10% 9% 10% Over 75 45% 7% 5% 14% All farms 100% 100% 100% 100%
100% 90% 80% 70% Over 75 60% 50 to 75 50% 25 to 50 40% 10 to 25 30% 0 to 10 20% Loss 10% 0% Dairy LFA grazing Lowland grazing All farms
Source: estimates from Farm Business Survey for financial year 2014-15
The key thing to note is that all the farm types have farms in each of the income bands, irrespective of the average income for the farm type as a group.
Aggregate Agricultural Account, 2015
Summary financial information about farming in Wales and the UK. Welsh results published on the WG site. UK figures are from “Agriculture in the UK” on Defra site.
Income data generally from UK level production data, that is allocated back to UK countries (with the usual problems of identifying “Welsh” produce). Costs are taken from Farm Business Survey estimates.
Results split into three tables – an overview, detail on income sources and detail on costs.
The dominant agricultural sub-sectors are dairy, sheep and beef.
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Diversification and farm household income
Returns from agricultural activity may not be the only source of income for a farm business or for a farm household.
The business may receive money from, for example, renting out unused buildings for non- agricultural purposes or from a range of other diversified activities. Identifying such additional activities is not straightforward. The money may or may not pass through the farm business accounts. If the activity takes place as a separate business then there is a good chance that it will not be included data collected by the Farm Business Survey (although the collectors make efforts to be comprehensive).
Similarly in the household of a farmer other household members may have jobs unrelated to the farm. There can also be other income from pensions, benefits, investments and so on that are not part of the farm business.
The diversified activities have been studied in a release from Farm Business Survey data up to 2013- 14. http://gov.wales/statistics-and-research/farm-diversification/?lang=en
A summary table for 2014-15 has also been produced as a response to an ad-hoc request. http://gov.wales/statistics-and-research/farm-diversification/ad-hoc-statistical-requests/?lang=en
The more complex issue of farm household income was most recently studied by the Welsh Rural Observatory in 2010. The following links shows all the outputs from the Observatory and has both the full and summary reports for the farm household study. http://www.walesruralobservatory.org.uk/our-publications
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Table 1: Diversified output and income on farms in Wales, by type of activity, 2012-13 to 2015-16
Total (£ million) £ per farm % of total output / income 2014-15 2015-16 2014-15 2015- 2014-15 2015- 16 16 Output Farm business output 1,521.5 1,377.8 155,500 140,200 100% 100% Diversified output, of 39.4 45.2 12,000 12,500 6% 7% which; letting buildings for 20.1 26.9 12,200 16,80 5% 9% non-farming use 0 processing/retailing 0.2 0.2 4,300 3,800 2% 2% of farm produce sport and recreation 3.0 2.2 9,100 6,300 4% 3% tourist 4.3 2.5 11,500 9,600 11% 6% accommodation and catering renewable energy (a) 7.9 11.3 6,700 8,100 3% 5% other diversified 3.9 2.1 6,300 3,200 4% 3% activity Income (b) 2014- 2015-16 2014-15 2015-16 2014 2015-16 15 -15 Farm business income 283.7 218.3 29,000 22,200 100% 100% Diversified output, of 24.6 29.4 7,500 8,200 21% 28% which; letting buildings for 17.5 23.3 10,600 14,50 23% 41% non-farming use 0 processing/retailing 0.2 0.2 3,200 3,200 11% 9% of farm produce sport and recreation 1.9 1.1 5,700 3,300 8% 4% tourist 2.4 1.4 6,400 5,300 27% 17% accommodation and catering renewable energy (a) 0.9 2.0 800 1,500 2% 5% other diversified 1.7 1.3 2,800 2,000 11% 10% activity
Number of farms % of farms undertaking the activity Number and % of farms 201 2015-16 2014-15 2015-16 with each activity (c) 4- 15 Total number of farms 9,783 9,826 100% 100% Diversified activity, of 3,281 3,605 34% 37% which; letting buildings for 1,646 1,605 17% 16% non-farming use processing/retailing of 50 62 1% 1% farm produce sport and recreation 325 350 3% 4% tourist 373 259 4% 3% accommodation and catering renewable energy (a) 1,183 1,400 12% 14% other diversified 622 660 6% 7% activity
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Source: Farm Business Survey
(a) Renewable energy includes power generating, wind turbines, solar power, anaerobic digester and from 2014-15 onwards, renewable heat initiatives.
(b) The methodology for analysing components of income was developed previously to allocate fixed and variable costs to four components of the business (also known as ‘cost centres’).Details of this methodology are available on gov.uk. The methodology to allocate costs involves a degree of estimation so results should be interpreted with caution. https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/423700/fbs- fixedcostmethod-23apr15.pdf
(c) In this section of the table, the number / % of farms with each type of diversified activity doesn't add up to the total for all diversified activity. This is because some farms are involved in more than one type of diversified activity.
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Sector Specific Focus
Dairy
Wales Dairy Cow Numbers (Source: ADHB Published 13 January 17)
Dairy cow numbers in Wales rose between June 2015 and 2016. There are now 248,650 dairy cows in Wales, a rise of 0.9%.
The number of dairy cows in Wales has increased by 5.0% (11,828) in the last ten years.
The number of dairy cows has risen by 5.0% over the last 10 years. Despite the overall rise in this period there was an overall fall in numbers between 2006 and 2013 and numbers still remain below the level of 1996. Numbers increased in 2014, 2015 and 2016 to reach 248,650.
For more information on UK cow numbers click here.
Source: Welsh Government
Year (June) Cow numbers
2006 236,822 2007 234,081 2008 228,614
2009 221,440 2010 221,340 2011 220,322
2012 223,557 2013 223,208 2014 234,305 2015 246,331
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2016 248,650 Wales Producer Numbers (Source: ADHB Published 3 April 17)
At the start of April 2017, the number of dairy producers in Wales stood at 1,732, down 6 from the previous month.
Between April 2016 and 2017 there was a decline of 26 (1.5%) Welsh dairy producers.
Pembrokeshire and Carmarthenshire saw a decrease in producer numbers on the month. Producer numbers for NE Wales, NW Wales, Ceredigion and South Wales remained unchanged, and Powys saw a slight increase.
For more information on English producer numbers, please click here.
Dairy farmer numbers in Wales Note: As of August 2012 Welsh dairy producer numbers are now being reported at Agri region level instead of at corresponding County level. This has been agreed with Welsh Government as the introduction of the 22 unitary authorities in April 1996 has made it necessary to define new agricultural statistical regions (the new authorities are largely defined by populations meaning that they are not always suitable for presenting agricultural data).This means that year on year comparisons are not possible prior to August 2013. The table below shows the composition of the 7 Agri regions.
Month Month Year on Year on on on Region Apr-17 Mar-17 Apr-16 year year % month month % change change change change
NE Wales 319 319 0 0.0% 325 -6 -1.8%
Ceredigion 199 199 0 0.0% 200 -1 -0.5%
Pembrokeshire 319 322 -3 -0.9% 323 -4 -1.2%
Carmarthenshire 473 477 -4 -0.8% 478 -5 -1.0%
NW Wales 124 124 0 0.0% 136 -12 -8.8%
Powys 152 151 1 0.7% 148 4 2.7%
South Wales 146 146 0 0.0% 148 -2 -1.4%
Total 1,732 1,738 -6 -0.3% 1,758 -26 -1.5%
Source: Food standards Agency
Note: As of August 2012 Welsh dairy producer numbers are now being reported at Agri region level instead of at corresponding County level. This has been agreed with Welsh Government as the
13 | P a g e introduction of the 22 unitary authorities in April 1996 has made it necessary to define new agricultural statistical regions (the new authorities are largely defined by populations meaning that they are not always suitable for presenting agricultural data).This means that year on year comparisons are not possible prior to August 2013. The table below shows the composition of the 7 Agri regions.
List of Current Unitary Old Corresponding Agri regions - 7 Authorities - 22 Counties - 8
Blaenau Gwent = Gwent = South Wales Bridgend = Mid Glamorgan = South Wales Caerphilly = Mid Glamorgan = South Wales Cardiff = South Glamorgan = South Wales Carmarthenshire = Dyfed = Carmarthenshire Ceredigion = Dyfed = Ceredigion Conwy = Clwyd = NE Wales Denbighshire = Clwyd = NE Wales Flintshire = Clwyd = NE Wales Gwynedd = Gwynedd = NW Wales Isle of Anglesey = Gwynedd = NW Wales Merthyr Tydfil = Mid Glamorgan = South Wales Monmouthshire = Gwent = South Wales Neath Port Talbot = West Glamorgan = South Wales Newport = Gwent = South Wales Pembrokeshire = Dyfed = Pembrokeshire Powys = Powys = Powys Rhondda Cynon Taff = Mid Glamorgan = South Wales Swansea = West Glamorgan = South Wales Torfaen = Gwent = South Wales Vale of Glamorgan = South Glamorgan = South Wales Wrexham = Clwyd = NE Wales
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Source: Food standards Agency
Please note: figures include buffalo, goat and sheeps' milk producers as well as cows' milk producers. Any producer selling milk for human consumption needs to be registered with the Food Standards Agency and this covers a range of possibilities from someone with 1 goat to 1000 plus dairy cows. Therefore any increase seen in the numbers should not necessarily be interpreted as an increase in the number of commercial dairy farmers.
It must be taken into account that Food Standards Agency figures represent the number processed forms received each month. Due to time lags in processing the forms or time lags in farmers informing the Food Standards Agency that they have stopped producing, these figures may not provide an exact representation of the number of farmers that have ceased producing milk in a particular month.
Wales Dairy Consumption (Source: ADHB Published 22 February 16)
Wales Consumption & Expenditure (household purchases)
DEFRA's Family Food Survey shows that average weekly consumption of whole milk in 2014 decreased by 30% on the year to 163ml per person per week. However, semi-skimmed consumption rose by 12% to 1,295 ml per person per week and fully skimmed milk by 1% to 147 ml per person per week.
Yogurt and fromage frais consumption rose by 15% between 2013 and 2014 to 175ml per person per week. Cheese consumption decreased by 4% to 100g per person per week, however, cream consumption per person per week was unchanged on the year.
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Average consumption per 2013 2014 person per week Liquid Milk (ml) -whole milk 232 163 -semi-skimmed 1,152 1,295 -skimmed 146 147 Total Liquid Consumption 1,530 1,605
Yogurt and Fromage Frais (ml) 152 175 Cheese (g) 104 100 Cream (ml) 21 21 Source: DEFRA Family Food Survey
Kingshay Dairy Costings – Wales (Source: ADHB Published 27 April 17)
Provisional Kingshay Wales data shows that average milk yield per cow was up by 0.8 litres/day between January and February 2017, and up by the same amount between February 2016 and 2017.
The average milk yield from forage decreased marginally on the month by 0.1 litres/day (0.9%) and decreased by 0.6 litres/day (8.5%) on the year.
Butterfat levels stood at 4.16% for February 2017, a decrease of 0.02 percentage points compared with the previous month.
Protein levels decreased 0.02 percentage points between January and February 2017 and were also down 0.02 percentage points on the year.
The average milk price in Wales increased by 0.37ppl (1.4%) to 27.35ppl in February 2017 compared with the previous month. Compared with the same month in the previous year the average milk price was up 5.24ppl (23.7%).
For more detailed information or to contact Kingshay click here.
Note: differences in text may not agree with values in table due to rounding.
Monthly results for: Feb-17 Jan-17 Feb-16 Cows in herd (end of month) 217 213 193 Yield per cow in milk (litres/day) 24.9 24.1 24.0 Yield from forage per cow (litres/day) 6.3 6.4 6.9 % of total yield from forage 25% 26% 29% Butterfat (%) 4.16 4.18 4.26 Protein (%) 3.23 3.24 3.25 Bactoscan (000) 32 30 29 Cell count (000) 150 146 163 Milk Price (ppl) 27.35 26.98 22.12
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Monthly results for: Feb-17 Jan-17 Feb-16 Concentrate use per litre (kg/litre) 0.34 0.34 0.33 Concentrate price per tonne (£/tonne) 213 210 204 All purchased feed cost (ppl) 8.05 7.91 7.39 MOPF per cow in herd (£) 117 123 88 MOPF per litre (p) 19.30 19.07 14.72 Source: Kingshay
Rolling Annual Averages
Rolling annual data for the 12 months to February 2017 showed that the average milk yield decreased by 95 litres per cow to 7,547 litres per cow. Protein levels decreased by 0.06 percentage points whilst butterfat levels were unchanged. The milk price has decreased over the 12 months by 0.84ppl (3.6%) to 22.25ppl.
Rolling annual averages to: Feb-17 Feb-16 Cows in herd 216 190 Yield per cow (litres) 7,547 7,642
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Rolling annual averages to: Feb-17 Feb-16 Yield from forage per cow (litres) 2,488 2,766 % of total yield from forage 33% 36% Butterfat (%) 4.09 4.09 Protein (%) 3.26 3.32 Milk Price (ppl) 22.25 23.09 Concentrate use per litre (kg/litre) 0.31 0.30 Concentrate price per tonne (£/tonne) 202 210 All purchased feed cost (ppl) 6.85 6.78 MOPF per cow in herd (£) 1162 1246 MOPF per litre (p) 15.40 16.31 Source: Kingshay
Finance
In 2015, dairy farmers in Wales received £3.2m of EC aid to help with their cash-flow problems following the downturn in milk prices.
Access to markets
The UK currently has a trade deficit of around £1.1bn, in 2015, a reduction of around £120m from 2014. The trade balance has improved over the past few years, with a reduction in imports and an increase in exports.
The eventual deal between the UK and EU will be key for the UK dairy industry. The EU currently provides the home for the majority of UK exports. In 2015 around 90% of UK exports were destined for the EU (down from 94% in 2011). With milk production expected to increase over the coming years, production of commodity products is likely to grow. Any tariffs imposed could incentivise processors to encourage stagnate milk production, depending on deals struck with other nations and buyer interest/competitiveness.
Access to labour
Labour could become an issue, with a number of dairy farmers using foreign workers.
Access to capital
The largest dairy processing companies in the UK are foreign owned and there is a risk that investment may diminish or be delayed. However, no such effect is expected for the dairy farms.
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Red Meat (source HCC)
The importance of exports to the Welsh red meat industry
The export market has become increasingly important to the Welsh red meat industry, as this helps to balance supply and demand and ensures carcase balance.
Being a member of the EU-28 has allowed the UK to have free market access to established red meat markets across the continent, particularly important for sheep meat exports although there has been a growing EU market for beef exports after the UK re-gained access following the BSE sanctions. HCC has been growing new and existing markets outside the EU for some years, however many of these would be less mature than the established EU markets. As such any loss of access, due to the potential issues with leaving the EU, could have a detrimental impact on the sector in Wales.
Sheep meat
Table one shows the UK sheep meat (fresh/frozen) balance sheet for 2011 – 2015.
Table 1: UK sheep meat balance sheet
2011 2012 2013 2014 2015 Production ‘000 tonnes 289.1 275.4 289.5 297.5 305.5 Imports ‘000 tonnes 103.9 100.3 115.5 107.8 109.6 Exports ‘000 tonnes 100.6 99.0 109.0 107.6 83.2 Total consumption ‘000 tonnes 292.5 276.8 295.9 297.7 332.0 Per capita Kg 4.7 4.3 4.6 4.6 5.1 Self-sufficiency % 98.9 99.5 97.8 99.9 92.0 N.B. Figures are carcase weight equivalent. Source: HMRC/GTIS
Another consideration when looking at exports is the value and volume of fifth quarter and skin exports. Table two shows the export and import figures for sheep meat offal for the 2011 – 2015 period. With the decline of the tannery sector in the UK the vast majority of the 14 million sheep skins (ewes and lambs) produced in the UK would be exported outside the EU. Historically these would be mainly to tanneries in China and Turkey.
Table 2: Volume of UK sheep meat offal imports and exports, 2011 – 2015
2011 2012 2013 2014 2015 Imports ‘000 tonnes 10.9 8.8 10.0 9.8 7.7 Exports ‘000 tonnes 3.4 3.8 3.0 3.0 4.1 N.B. Figures are shipped product weight. Source: HMRC
With Wales having 28% of the UK breeding flock2 and less than 5% of the UK’s population. It can clearly be seen that Wales produces considerably more lamb than is consumed in the country annually. Table three shows where red meat produced in Wales is consumed, highlighting the significance in identifying and maintaining new and existing export markets.
2 Defra and WG June Survey results
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Table 3: Where lamb from Wales is consumed
Consumption Wales 5% Rest of UK 55% - 60% Exported 35% - 40%
For sheep meat, the value of exports from Wales has grown considerably from £57 million in 2004 to £106 million in 2015. The figure for 2015 was reduced on the previous year’s total of £133 million due to exchange rate fluctuations and national procurement policy changes impacting on UK exporter’s competitiveness. 95% of the sheep meat exports in 2015 were shipped to markets within the other member states of the EU-28.
UK sheep meat imports are dominated by New Zealand (74% of all UK sheep meat imports in 2015) and Australia (15% in 2015).
In the last 10 to 15 years domestic and export markets have moved away from purchasing whole carcases to specific cuts and this trend is continuing. In 2015, over a third of all sheep meat exports from the UK were sent in cuts, this compares to 13% in 2005. This has been a result of changing consumer preference, the need to maximise carcase value, technical developments and emerging new markets. This can pose a challenge to the industry particularly when one market may have a preference for specific cuts. For example the UK market has a preference for significant cuts predominately legs (see table 4), leaving a large proportion of the carcase to be sold to other markets.
As a result the of imbalance in UK consumer preferences, processors have the continued challenge of achieving lamb carcase balance, with the cuts that have lower home market demand potentially being sold at a discounted price which in turn devalues the whole carcase. Export markets with a preference for these cuts, such as forequarter and the fifth quarter, are key to balancing carcase utilisation, increasing the value of the whole carcase.
In addition there can be a seasonal influence on carcase balance, as different markets have higher demand for different cuts throughout the year. For example the UK Easter and Christmas market will predominately require legs, leaving a high proportion of loins and forequarters. Therefore it is important that processors can find profitable markets for these cuts to ensure the whole carcase is utilised.
Table 4: UK retail lamb market cut by percentage of market share, 2015
Lamb Cut % of UK retail market Legs 41% Loin i.e. chops/ steaks 24% Shoulder 12% Other i.e. mince 23% Source: Kantar Worldpanel
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Beef and veal
Table five shows the UK beef and veal (fresh/frozen) balance sheet for 2011 – 2015.
Table 5: UK beef and veal balance sheet
2011 2012 2013 2014 2015
Production ‘000 tonnes 935.5 885.2 846.7 877.3 887.9
Imports ‘000 tonnes 382.9 406.3 393.1 413.7 430.2
Exports ‘000 tonnes 176.0 147.9 131.8 142.2 131.7
Total consumption ‘000 tonnes 1,142.5 1,143.6 1,108.0 1,148.9 1,186.4
Per capita Kg 18.2 18.0 17.3 17.8 18.4
Self-sufficiency % 81.9 77.4 76.4 76.4 74.8
N.B. Figures are carcase weight equivalent. Source: HMRC/GTIS
Another consideration when looking at exports is the value and volume of fifth quarter and hide exports. Table six shows the export and import figures for beef offal for the 2011 – 2015 periods.
Table 6: Volume of UK beef offal imports and exports, 2011 – 2015
2011 2012 2013 2014 2015
Imports ‘000 tonnes 24.2 26.7 24.5 19.3 16.8
Exports ‘000 tonnes 33.4 32.2 33.1 44.2 47.7
N.B. Figures are shipped product weight. Source: HMRC
The main destination for beef exports would be the other European countries. In 2015 93% of total UK beef and veal exports (excluding offal) was shipped to other member states within the EU-28, with Ireland and the Netherlands combined accounting for over half of total exports. Conversely a high proportion of UK beef imports would be sourced from the EU-28 as well, in 2015 the figure stood at 91% of total imports.
Following the end of BSE restrictions on beef exports, there has been increased emphasis on marketing premium beef cuts to the continent so as to increase returns for UK producers, processors and exporters. It should however be stated that a large proportion of current exports is derived from cow beef, particularly in minced format, much of which would be shipped to both Ireland and the Netherlands for further processing and trading to other destinations. For beef and veal (excluding offal and hides), the estimated value of exports from Wales for 2015 was £51 million.
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With the UK being net importers of beef any changes to the trading environment could undoubtedly have an impact on availability and therefore consumer purchasing. Historically there have been significant amounts of imported Irish beef available in UK retailers which would be in direct competition with home produced beef, therefore should there be any disruption in this trade environment there would be considerable implications for UK livestock and retail prices. Supply and demand economics would suggest that if there is a disruption in trade then there could be an increase in producer prices however if this leads to increased retail prices then consumption and purchases could decline.
The size of the beef herd in Wales has declined significantly since the end of coupled support payments in 2004. Latest figures by Welsh Government suggests that the number of beef cows (over 2 years of age) that had calved in Wales stood at 166,700 in June 2015, this compares with a figure of 210,800 in June 2005, a decline of 21%. This fall in numbers have come due to low profitability, disease concerns/restrictions (i.e. bTB), infrastructure issues and the perceived improved income that could be derived from other agricultural sectors/activity. Any changes or restriction to the UK’s ability to export beef (assuming import levels remain constant) could exacerbate the shrinking of the herd in Wales, particularly in the upland and hill areas. As grazing cattle have a well documented role in improving biodiversity, access and landscape management, this potential decline could have far reaching environmental and tourism consequences as well as a reduction in the volume of high quality beef that is produced in Wales.
A unforeseen consequence of the EU referendum result may be that Irish exporters, who have previously relied heavily on the UK market for red meat (particularly beef) exports, may look for markets further afield for their product in order to mitigate the risk associated with having one or two large outlets. This market strategy could occur regardless of any trade agreement and as such the Irish could target the same emerging markets as the UK exporters.
Key challenges that would face sheep and beef sector in Wales through restriction or disruption to trading with the EU market
Seasonality of supply could lead to a scenario where price volatility would be exacerbated. In October 2015, 65% (a total of 1.4 million head) more lambs were slaughtered in UK abattoirs than in May (830,000 head).
Carcase balance issues would be further exaggerated due to UK consumer purchasing preferences.
Export market for offal and skins/hides could be affected which would impact on processor margins and therefore producer prices. It should however be noted that the current market for these products is outwith EU.
Traditionally the light lamb trade has been associated with exporting to the Mediterranean region (particularly Italy and Spain). Any loss to this market access would have a significant impact on prices for these types of carcases which are associated with the hill regions of Wales.
Any impact on beef profitability could lead to a further reduction in the national herd which may lead to negative environmental and tourism consequences due to the de-stocking of the uplands.
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The three largest processors in Wales are located in areas of relatively low socio-economic levels, Llanybydder, Llanidloes and Merthyr Tydfil. Should these sites become uneconomical due to processing pressures this could have a detrimental impact on these local economies.
Should free movement of people not exist post-EU exit the red meat processing sector would face significant labour force challenges as many have a high proportion of non-UK workers, with particular reliance on eastern European workers.
UK consumption, per capita, of sheep meat has fallen in the last decade (6.6kg in 2000, 5.1kg in 2015) therefore this could add to pressures on the sector if the UK lost or encountered market access difficulties.
Access to markets
The export market has become increasingly important to the Welsh red meat industry, as this helps to balance supply and demand and ensures carcase balance. Access to the Single Market has allowed the UK to have free market access to established red meat markets across the continent, particularly important for sheep meat exports, although there has been a growing EU market for beef exports after the UK re-gained access following the BSE sanctions.
The following Table shows where red meat produced in Wales is consumed, highlighting the significance in identifying and maintaining new and existing export markets:
Consumption Wales 5% Rest of UK 55% - 60% Exported 35% - 40%
For sheep meat, including lamb, the value of exports from Wales has grown considerably from £57 million in 2004 to £133 million in 2014 (down to £106 million in 2015 due to exchange rate fluctuations and national procurement policy changes impacting on UK exporter’s competitiveness). 95% of the sheep meat exports in 2015 were shipped to markets within the other EU Member States.
For beef and veal (excluding offal and hides), the estimated value of exports from Wales for 2015 was £51 million. In 2015 93% of total UK beef and veal exports (excluding offal) was shipped to other EU Member States, with Ireland and the Netherlands combined accounting for over half of total exports.
Red Meat Supply Chain UK
ADHB have developed an eFoodChainMap which is an interactive map which plots data about the red meat food chain in the UK. The map shows a range of information, including the location of auction markets, abattoirs, meat processors and meat traders around the UK, using colour coded pins. The map uses data provided by AHDB Pork and AHDB Beef and Lamb and is based on Google maps technology. The map can be customised to show specific data and has a range of printing options.
For further information please follow the attached link: https://www.emap.org.uk/map.aspx?sid=1
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Sensitive Product Status
An sensitive product may be described as a product that is particularly susceptible to competition from imports from other countries. During trade agreements products described as sensitive may be protected from trade negotiations if there is reason for them to be protected.
Sensitive products may be described as those products which cannot compete with imports or other products due to their production system. It is often important to protect the sensitive product due to the economies the industry supports. Nations with production systems creating a competitive advantage over and above those products due to the differing methods of production may be regarded differently and trade barriers may be discussed to protect those products with protected sensitive status. There are a number of examples of sensitive product which have been made exempt or partially exempt from trade negotiations.
Beef was excluded from the Europe and Mercosuri trade deal following concerns from European beef producers who fear they would be unable to compete with cheaper beef imports from South America, where the cost of production is significantly lower than in Europe. Fresh, chilled and frozen boneless bovine meat has been cited as the most frequent product selected as ‘sensitive’ during trade negotiations. Another example of sensitive product within trade negotiations includes sugar which has been described as a protected in the Doha trade negotiations. The EU produce over 50% of global beet sugar this however cannot compete like for like with sugar cane which is produced elsewhere in the world and supplies over 80% of the global sugar production. Because EU economies are so dependent on the sugar beet industry the product is regarded as sensitive in order to protect the industry during trade dealsii.
As referred to above, the European production systems differ greatly to those in other continents and industries may find it difficult to compete with a lower cost of production. Welsh Beef and Welsh Lamb are both produced within Wales where natural features cause difficulties and challenges in production systems therefore causing a higher cost of production. The topography and climate result in the majority of land throughout the country referred to as less favoured areas which are consequentially less productive. The industry however holds a great influence on the local economy, community and environment with Welsh red meat production contributing to the largest share of Welsh Agricultural Output. Around 83% of the active cattle and sheep holdings are within the designated Less Favoured Areas (LFA) of Wales and these are predominantly hill and upland areas that are characterised by depopulation, poor agricultural production conditions, low incomes and a workforce dependent on agriculture. Welsh red meat producers not only play a vital role in supporting the rural economy but are also integral to the sustainable management of the land upon which Welsh food and tourism industries rely.
The EU Protected Food Name scheme protects products in relation to geographic and recipe basis. Welsh Lamb and Welsh Beef were granted protected name status in 2002 and 2003. The schemes are based on the legal framework EU Regulation No 1151/2012 and include the following: Protected Designation of Origin (PDO), Protected Geographical Indication (PGI), and Traditional Specialities Guaranteed (TSG). The schemes may be used to further illustrate comparisons across production systems and support the requirement for protection of products and sensitive status during trade negotiations.
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Economics/Finance
Key income and profitability figures for the Welsh farming industry are:
Wales UK Wales as % £ million of UK Gross output at basic prices 1,495 23,852 6.26 Intermediate consumption 1,110 GVA at basic prices 385 8,495 4.53 Total income from farming 175 3,769 4.64 Source Aggregate Agricultural Account 2015 (Welsh Government) and Defra, Agriculture in the United Kingdom 2014
To put the sector’s GVA into context, in 2014 the aggregate GVA for Wales was £54,336m and £1,618,346m for the UK. Wales represented 3.4% of the UK’s GVA and agriculture represents 0.62% of Wales’ GVA (in 2013).
Forecasts of farm incomes, 2016-17
Release date: 23 March 2017
The forecasts give a broad indication of how farm incomes are expected to move since 2015-16, and are subject to a margin of error.
The 2015-16 release includes final figures for 2015-16, and greater analysis. Final figures for 2016-17 are provisionally due to be published in November 2017.
Key points
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Assets and liabilities
Another key part of the value of farms is in the assets – particularly land – and liabilities that the businesses have. This can also be studied from the Aggregate Account data. The assets and liabilities data is at the moment for the UK as a whole (we are working on a Wales only balance sheet but it is not yet ready for release).
The following charts show an overview of how assets and liabilities have changed over time in the UK. All show the period 1984 to 2014. The first show the total assets and liabilities and the overall net worth. The second has a short breakdown of assets into land, other fixed assets (buildings, machinery, breeding livestock and others), and current assets (non-breeding livestock, crops and stocks, and others). The third shows the liabilities split between long term and short term.
Note that the values in the charts are in billions (rather than millions in the previous tables).
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Chart 3
UK agriculture assets, liabilities and net worth, 1984 to 2014 Overall assets and liabilities at 2014 prices (£ billions) 400 300 200 100
0
1984 1985 1988 1989 1990 1992 1993 1994 1996 1997 1998 2000 2001 2002 2005 2006 2007 2009 2010 2011 2013 2014 1986 1987 1991 1995 1999 2003 2004 2008 2012 Assets Liabilities Net worth
Assets at 2014 prices (£ billions) 250 200 150 100 50
0
1984 1985 1988 1989 1990 1992 1993 1994 1996 1997 1998 2000 2001 2002 2005 2006 2007 2009 2010 2011 2013 2014 1986 1987 1991 1995 1999 2003 2004 2008 2012 Land Other fixed Current
Liabilities at 2014 prices (£ billions) 20 15 10 5
0
1985 1987 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 2000 2002 2004 2006 2008 2010 2012 2014 1984 1986 1988 1999 2001 2003 2005 2007 2009 2011 2013 Medium and long term Short term Total
Source; Agriculture in the UK, Defra
The chart shows that the growth in the value of the assets is largely driven by the value of the land.
Regional Gross Value Added for agriculture and the whole economy
ONS produce figures for regional GVA at the “NUTS3” level. There are 173 such areas in the UK with 12 in Wales. Generally these are combinations of local authorities. This is the lowest level at which Gross Value Added figures are calculated.
All regional Gross Value Added figures are subject to considerable uncertainty because of the need to allocate activity to a single region for GB wide enterprises. This is both an issue of whether the
27 | P a g e concept of regional values is valid in the modern world and also with the methodology problems of making an allocation.
The ONS divides the economy into a standard set of “sectors”. Agriculture is shown separately but the sector includes agriculture, fishing and forestry.
The following table shows the share of total GVA in a Welsh NUTS3 region that comes from the various industrial sectors.
CAP - Basic Payment Scheme (Pillar 1)
Pillar 1 provides Wales with €318M per annum before Pillar to Pillar transfers, €270M after transfers. There are 15,500 active Pillar 1 claimants.
Across all farm types, subsidies accounted for an average of 81% of Farm Business Income in 2014/15; just over half of all farms either made a loss or would have done so without subsidy.
The loss of EC subsidy for our farmers – if no alternative support is available – will inevitably put our producers at a competitive disadvantage compared with our neighbouring countries that will remain in the EU e.g. the Republic of Ireland, and countries in mainland Europe.
Welsh farmers are on a relatively level playing field with their nearest competitors, since the Common Agricultural Policy ensures that competitor countries such as France and the Republic of Ireland do not receive significantly greater subsidy than our farmers do. Outside the EU then our farmers will require alternative support to remain competitive and it is not clear what replacement funding the UK Government would make available (and which they would have to negotiate with the World Trade Organisation to make it legal).
Pillar 2
Three long-term strategic objectives have been identified in relation to EU rural development policy during the period 2014–20, in line with Europe 2020 and CAP objectives:
improving the competitiveness of agriculture; safeguarding the sustainable management of natural resources and climate action; and ensuring that the territorial development of rural areas is balanced.
The European Agricultural Fund for Rural Development (EAFRD) is designed to help:
foster the competitiveness of agriculture; ensure the sustainable management of natural resources; support action related to the climate; and achieve a balanced territorial development of rural economies and communities, including the creation and maintenance of employment.
The policy is implemented through national and regional rural development programmes (RDPs), which are constructed so as to: strengthen the content of rural development measures; simplify rules and / or reduce related administrative burdens; and link rural development policy more closely to other funds.
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An RDP has a reach far wider than farming. Nevertheless, farming and food form a backbone of economic activity in rural areas. In the UK, the food and farming sector is worth £103 billion and employs 3.8 million people, around 13.4% of the UK workforce. In Wales, the food and drink supply chain (retail, wholesale, catering, agriculture and manufacturing) has a turnover of £16.8 billion (2013) and employs 223,100 people (2014), some 18.4% of the workforce.
The Welsh Government RDP 2014 – 2020 has interventions supporting the following areas and the following interventions are approved under the RDP (though not all have been opened).
Farming businesses: Farming Connect Glastir (Entry, Advanced, Commons, Organic, Woodlands, Small Grants, Habitat Network) Sustainable Production Grant Young Farmers Start-up Rural Business Investment Rural Business Start-up Farm and Forestry Infrastructure Co-operation and Supply Chain Development Forestry and woodland Farming Connect businesses: Glastir (Woodland Restoration, Woodland Creation, Advanced woodlands options, Small Grants, Habitat Network) Timber Business Investment Forestry Risk Management Farm and Forestry Infrastructure Woodland Management Co-operation and Supply Chain Development Food businesses: Farming Connect Food Business Investment Co-operation and Supply Chain Development Other rural businesses: Farming Connect Rural Business Investment Rural Business Start-up LEADER Rural communities: Rural Community Development Fund LEADER
Pillar 2 provides Wales with €51M per annum before Pillar to Pillar transfers, €99M after transfers. This is co-financed by domestic funds, as follows:
Funding Derogation Total 2014-2020 (£)
EAFRD 301,753,301
Pillar 1 Transfer 248,569,988
Voluntary Modulation 7,140,000
Domestic Co-financing 399,998,561
TOTAL 957,461,850
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Debt
Levels of debt in UK agriculture are at a historic high of £17.8bn. This is a £1.8bn rise on the previous 12 months. This level of borrowing is not necessarily a bad thing, of course, since most businesses borrow at various times for various purposes. This could be a sign of confidence in farming, borrowing to invest etc. The British Agricultural Bureau estimates that up to 40% of new borrowing to be for coping with the cash flow squeeze. Compared with agriculture’s assets the debt level is low.
Employment
In respect of employment, the same sources reported agriculture supplying 4.19% of Wales’ employment. Note, however, that this figure accounts for part-time jobs as full-time, so it tends to overstate the share. 2% is generally felt to be closer to the true percentage.
Wider Benefits to Wales Delivered by the Agriculture Sector (from Kevin Roberts Paper)
The agriculture sector brings wider benefits to Wales than described by just its GVA contribution. For example, diversification of farm businesses into tourism (B&B’s, Campsites, leisure destinations) and increasingly energy (solar, wind, CHP) is common place and the contribution of agriculture cannot therefore be measured by the contribution of agricultural produce alone. For example, agriculture will contribute to the value of wildlife and outdoor activity tourism in Wales, which is estimated to be in the region of £6.2 billion with an estimated 206,000 jobs across Wales. A number of studies have shown that tourists view the ‘farmed landscape’ favourably.
There is also a clear contribution from agriculture to the provision of services like clean water and air that Wales benefits from. Although these do not generate income, it is nevertheless possible to quantify the value of the benefit (e.g. a drinking water treatment plant costing approximately £10 million; poor air quality was estimated to cost approximately 5% of the UK’s GDP in 2010). More broadly there are also the wider social and cultural benefits (e.g. language, landscape, role at the heart of rural communities).
Access data
Wales has approximately: 16,200 miles of footpaths 3100 miles of bridle-paths 1200 miles of byways
Since 1998 the area of land accessible by right to the public has increased three-fold, National Trails have been created and extended, and 4,700 miles of rights of way have been opened up under improvement plans.
The vast majority of this access is over farmed land.
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Environment and Service Delivery
Agriculture accounts for more than 80 per cent of the land in Wales. This means that there is great potential for environmental impacts – either positive or negative - and carbon reduction. The corresponding figure for the UK is 70% and therefore Wales has the potential to contribute more proportionally to environment and climate change action. For example, given the high amount of land accounted for by agriculture, then it follows that solving the issue around producing enough of our energy renewably needs to consider the its contribution.
Agricultural land can act as a major store of water, providing an important role in downstream flood mitigation. This is particularly the case in Wales, where such a high proportion of land is managed under permanent pasture, which has increased water infiltration rates and storage potential.
The management, use and appreciation of the natural environment has been recognised as making a relatively greater contribution to the economy of Wales than to other UK countries. It directly supported an estimated 117,000 full-time equivalent (FTE) jobs.
The management and use of the environment, and the multiplied economic effects of this, generates spending of around £9 billion each year to Wales - almost £1 in every £10 of Welsh GDP is dependent on the environment.
ONS in their work looking at the value of natural capital have estimated that the monetary valuation of UK agricultural land is estimated to be £45.1 billion based on 2011 prices.
In terms of carbon, the monetary valuation of net greenhouse gas sequestration services provided by UK natural capital in 2007 and 2011 is estimated to be £7.4 billion and £8.0
billion. Carbon sequestration from living biomass (mostly trees) was estimated at 1.2 MtCO2, which equals a value of £75.6 million for the annual value of carbon sequestration in Wales in 2016. There is also significant scope for greater sequestration of carbon through afforestation of less favourable marginal land.
Environment The use of land for agriculture, particularly through the dairy and red meat sectors, not only provides food but is multifunctional, contributing to other services valued by society, deemed as ‘ecosystem services’. These have significant direct and indirect economic value. The indirect value to the economy is much greater in terms of what they deliver than what they cost to maintain or protect. There are gaps in knowledge and there will be other ways of showing how the economy, the environment and the people of Wales are reliant on each other to ensure a resilient Wales for the well-being of future generations. This will be explored further in NRW’s State of Natural Resources Report, the first of which is to be published in Autumn 2016. However, the environment has been recognised as making a relatively greater contribution to the economy of Wales than to other UK countries. • The management, use and appreciation of the natural environment in Wales directly supported an estimated 117,000 full-time equivalent (fte) jobs; • The supplier and induced-income effects of these activities multiplied the total number of fte jobs in Wales that depend on the environment to 169,000 – equivalent to 1 in 6 of the Welsh workforce;
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• The management and use of the environment, and the multiplied economic effects of this, generates spending of around £9 billion each year to Wales - almost £1 in every £10 of Welsh GDP is dependent on the environment; • This work contributes around £1.8 billion in wages to people in Wales. (CCW, 2001)
Farming is the major user of the land resources of Wales, with 1.7 million hectares or 80% of the total land area under agricultural use. Not surprisingly, livestock and livestock products accounts for a high proportion of this agricultural activity. Woodland on agricultural holdings amounts to 37,156 hectares or just over 2% of the total agricultural area.
57% of the Welsh landscape is outstanding or high landscape quality, which reflects a rich and diverse habitat cover. Semi-natural habitats cover 623,100ha (30%) of land area. Protected sites are key in the protection of semi-natural habitats and species. Many SSSIs exist because of (not in spite of) agricultural management. SSSIs are highly regarded by the public – one study by GHK (2011) said that the public was willing to pay £128 m for the ecosystem services provided by Welsh SSSIs.
Wales has extensive, biodiverse and economically significant semi-natural grasslands (our most extensive semi-natural habitat), as well as a large amount of heathland and peatland habitats (extremely significant in providing long-term storage of carbon). In total, 410 million tonnes of carbon is thought to be stored in Welsh soils, which itself is worth hundreds of millions of pounds.
Sources: CCW (2001) Valuing Our Environment: The Economic Impact of the Environment of Wales. Countryside Council for Wales, Cardiff. GHK (2011) Benefits of Sites of Special Scientific Interest. Final Report for Defra. NRW (2015) A Snapshot of the State of Wales’ Natural Resources. Natural Resources Wales, Cardiff.
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Culture and the Welsh Language
The Welsh language is an inseparable part of the social fabric of rural Wales.
Unlike some other parts of the UK, cultural connections with farming across Wales remain comparatively strong, and agriculture continues to play a role in attracting and ensuring maximum benefit from tourism and sustaining the Welsh language.
Throughout Wales, those who speak Welsh within the agriculture category make an essential contribution to the preservation of the language in terms of numbers, and in particular in terms of the proportion within the category who speak Welsh (29.5%), which is higher than in any other employment category.
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Food and Drink
Summary of the Sector
The Food and Drink supply chain in Wales:
Includes primary production, manufacturing, retail, wholesale and non-residential catering employs 223,100 (2014) up from 222,400 – see pie chart in 26,765 business units (2015) up from 25,860 with a turnover of £16.8bn (2013) GVA of £4.2bn (2013) and exports of £0.264bn (2015) down 13% from £0.302bn (2014)
– France, Ireland, Spain, Germany and Belgium being the top 5 destinations Welsh Retail Sales of Food and Drink were £5.5bn (2015)
The sector in Wales represents: 18.4% of all Wales employment 22.2% of the total number of business units in Wales 16.2% of turnover of the non-financial business economy in Wales. (UK average of 12.7%). 3.7% of the turnover of the UK food and drink sector The majority of food and drink business units in Wales (70.8%) employ fewer than 5 people. There are 70 businesses employing more than 250 people down from 80 in 2014.
Summary Statistics for Welsh Food and Drink Sector
Wales UK (GB) Wales as % of UK (GB)
Number of Business Units 2015 26,765 420,475 6.4%
Employment 2014 223,100 3.907m (GB) 5.7% (GB)
Proportion of Full Time Employee Jobs 42% 49% (GB) -
Turnover 2013 £16.8bn £449.2bn 3.7%
GVA 2013 £4.2bn £103.4bn 4%
Source: ONS Crown Copyright
Trends
Overall employment has increased slightly from last year but this masks a substantial drop in retail and wholesale and a substantial increase in agricultural employment.
The number of business units has risen following a decline from 2010-2014.
The profile of employment within each of the sub sectors is very different:
Working owners represent 70% of employment in agriculture and fishing down from 75% Full time employees represent 93% of employment in the manufacturing sector up from 90% 34 | P a g e
Part-time employment is up from 56% to 70% in retail.
Food and Farming ‘Priority Sector’
Summary of the Sector
The Welsh Government defines the Food and Farming ‘Priority Sector’ as follows:
Includes primary production and manufacturing only has 30,300 employees not including self-employed (2015) up from 28,300 in 2014 but 84,200 workers if all farmers and agricultural workers are included (2014) up from 76,400 in 14,155 local business units (2015) up from 14,145 in 2014 with a turnover of £6.1bn (2015) up from £5.8bn in 2014 and GVA of £1.55bn (2013) up from £1.37 in 2012
The sector in Wales represents:
2.5% of all Wales employment 12.4% of the total number of business units in Wales 4.6% of turnover of the non-financial business economy in Wales. (UK average of 3.7%). 4.3% of the turnover of the UK food and drink sector
Over 97% of food and farming priority sector business units in Wales employ fewer than 10 people due to the inclusion of farms. There are 120 large businesses in the sector, employing more than 250 people, up from 95 (2015).
Summary Statistics for Welsh Food and Farming Priority Sector
Wales UK (GB) Wales as % of UK (GB)
Number of Business Units 2015 14,155 157,505 9%
Employment 2014 (excluding self-employed) 30,300 663,700 4.6%
Proportion of Full Time Employment 84% 84% (GB) -
Turnover 2015 £6.1bn £142.5bn 4.2%
GVA 2013 £1.55bn £22.2bn 33.4 4.6%
Workers with highest qualification at Level 4 10.8% 19.8% - & above
Investment in R&D 2013 £4m £425m 0.9%
Source: ONS Crown Copyright
Trends
Employment has been growing strongly since 2012.
There has been some recovery in the number employed in larger businesses (more than 50) back to 2010 levels.
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There has been some recovery in the number of large businesses (250+ employees) but the overall number of business units is relatively stable and still below pre-recession levels.
Food and Drink Manufacturing
Summary of the Sector
The Food and Drink Manufacturing sector in Wales:
employs 22,100 people (2014) down from 22,400 in 2013 in 555 business units (2015) up from 520 in 2014 with a turnover of £4.8bn (2013) up from £4.3bn in 2012 GVA of £1.45bn (2013) 174 Great Taste Award winners (2015) 4 protected food name products - PGI Welsh Lamb, PGI Welsh Beef, Pembrokeshire Earlies PGI and Anglesey Sea Salt/Halen Môn PDO (2015).
The sector in Wales represents:
1.7% of all Wales employment 0.5% of the total number of business units in Wales 4.6% of turnover of the non-financial business economy in Wales. (UK average of 2.5%). This is an increase from 4.1% in the previous year. 5.3% of the turnover of the UK food and drink sector 68% of food and drink manufacturing business units in Wales employ fewer than 10 people. 30% employ between 10-249 people. There are 20 large businesses in the sector, employing more than 250 people. Skill levels are below UK.
Summary Statistics for Welsh Food and Drink Manufacturing Sector
Wales UK (GB) Wales as % of UK (GB)
Number of Business Units 2015 555 10,775 5.1%
Proportion of Businesses Units med or large 15% 14% -
Employment 2014 22,100 385,454 (GB) 5.7%
Proportion of Full Time Employee Jobs 93% 90% (GB) -
Turnover 2013 £4.8bn £91bn 5.3%
GVA 2013 £1.45bn £24.8bn 5.8%
Workers with highest qualification at Level 4+ 15% 22% -
Annual Wages (Mean Food Manuf.) 2014 £17,426 £20,211 -
Investment in R&D 2013 £4m £425m 0.9%
Source: ONS Crown Copyright
Trends
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Overall business confidence in Wales is down (May 2016) at 53.1 (58.6 in May 2015). Output growth has slowed to its weakest for the last three years, though Wales is ahead of England. Cost increases such as the National Living Wage, higher fuel prices and uncertainty around Brexit have been the causes.
The sector is growing in terms of turnover and business units while employment is falling slightly. This suggests that overall productivity of the sector is increasing. Welsh productivity in food and drink continues to be ahead of the UK with GVA per head of £64,800 versus £54,700 at the UK level.
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Meat and Meat Products Sub Sector
Summary of the Sector
The meat and meat products sector in Wales:
has primary production of 9.504m sheep, 1.119m cattle, 25,300 pigs and 4.5m chickens (9.739m sheep, 1.103m cattle, 28,400 pigs and 6.3m chickens in 2014) slaughters 3.41m sheep, 160,000 cattle, 39,600 pigs and 104m chickens (2015) (3.38m sheep, 150,000 cattle, 32,800 pigs and 104m chickens in 2014) produces 47,700 tonnes of sheep meat; 65,300 tonnes of beef, 3,200 tonnes of pig meat and 152,000 tonnes of poultry meat (2015) (63,900 tonnes of sheep meat; 42,600 tonnes of beef, 2,600 tonnes of pig meat and 152,000 tonnes of poultry meat in 2014) employs 6,600 people (2014) up from 5,700 in 2013 in 65 business units (2015) same as 2014 with a turnover of £1,282m (2013) GVA of £216m (2013) has red meat exports of £157m (HCC 2015 up from £90m in 2014) with lamb accounting for £106m and beef £51m HMRC figures suggesting £30m meat exports from Welsh companies (2015) down from £37m (2014) France, Ireland, Spain, Netherlands and Belgium being the top 5 destinations (2015) has Welsh retail sales of meat of £1,059m (2015) has 57 FSA approved premises for red meat (59 in 2015), 37 for poultry (38 in 2015), 11 for game (13 in 2015), 11 for wild game (same as 2015) and FSA plant audit scores 34% Good (32% in 2015); 61% Generally Satisfactory (56% in 2015) is the largest sub sector within Welsh food and drink manufacturing by employment.
The sector in Wales represents:
30% of all Wales Food and Drink Manufacturing employment 12% of Wales Food and Drink Manufacturing business units
Summary Statistics for Meat and Meat Products Sector
Wales UK (GB) Wales as % of UK (GB)
Number of Business Units 2015 65 1,225 5.3%
Proportion of Business Units medium and 23% 19% - large (50+ employees)
Employment 2014 6,600 73,500 (GB) 9%
Proportion of Full Time Employee Jobs 97% 92% (GB) -
Turnover 2013 £1,282m £17,087m 7.5%
GVA 2013 £216m £2,885m 7.5%
Retail Sales 2015 Kantar Worldpanel £1,059m £17,285m 6.1%
Source: ONS Crown Copyright, Kantar Worldpanel
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Trends
Employment has increased substantially from 5,700 in 2013 to 6,600 in 2014. This re-establishes meat and meat products as the largest sector by employment in Welsh Food and Drink Manufacturing.
The number of businesses has remained stable at 65.
The proportion of small businesses has increased to 54% from 40% (fewer than 9 employees).
However, 23% are significant employers with more than 50 people.
Meat remains one of the few Welsh food and drink sectors with large businesses, employing over 250 employees. In 2014, 5 were recorded, same as 2013.
Long Term Consumer Trends
The household purchases of carcase meat have fallen by 17% over the past decade. The fall has been most pronounced in mutton and lamb, which is relatively more expensive than other meats. There has been an overall increase in chicken consumption, but a fall in other poultry, such as turkey. The consumption of products such as pates, delicatessen sausages, pasties and meat pies have increased over the period. There has been some recent recovery in meat consumption and ready meals, possibly reflecting growth in spending post-recession
Household Average Purchases of Meat and Meat Products (grams per person per week)
Wales UK
2002/03 Average % change 2002/03 Average % change 2012/14 2012/14
Carcase Meat 222 184 -17% 230 192 -17%
Beef and Veal 102 89 -13% 118 89 -25%
Mutton and Lamb 59 34 -43% 51 33 -35%
Pork 61 60 -2% 61 55 -10%
Non Carcase Meat and Meat 848 807 -5% 820 788 -4% Products
Uncooked chicken 151 175 16% 165 186 13%
Sausages 64 56 -13% 57 59 4%
Ready Meals and convenience 161 183 14% 157 166 6% meat products
Source: DEFRA, Family Food Statistics
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Kantar Data
The total Welsh retail spend on fresh meat was £362m in the year to May 2015, up 1.1% on the year earlier, with individual consumers buying £218 worth of fresh meat annually. £121m of fresh beef was purchased at retail in Wales in the year to May 2015, £36m of lamb and £47m of pork. There has been strong growth in the market value of chilled burgers and grills, increasing by 46% since 2013, to £15m. The retail spend on fresh poultry and game in Wales was £171m, down 1.1% on the previous year, but remaining 4.3% higher than 2013.
Bakery Sub Sector
Summary of the Sector
The Bakery sector in Wales:
employs 5,400 people (2014) down from 5,900 in 2013
in 180 business units (2015) up from 155 in 2014
with a turnover of £652m (2013)
GVA of £283m (2013)
Welsh retail sales of £510m (2015), and
is the second largest sub sector within Welsh food and drink manufacturing by employment
The sector in Wales represents:
24% of all Wales Food and Drink Manufacturing employment
32% of Wales Food and Drink Manufacturing business units
Summary Statistics for Welsh Bakery Sector
Wales UK (GB) Wales as % of UK (GB)
Number of Business Units 2015 180 3,360 5.4%
Proportion of Business Units medium and 8% 10% - large (50+ employees)
Employment 2014 5,400 95,810 (GB) 5.6%
Proportion of Full Time Employee Jobs 90% 86% (GB)
Turnover 2013 £652m* £11,427 5.7%
GVA 2013 £283m* £4,792m 5.9%
Welsh Retail Sales £509m £8.6bn (GB) 6%
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Source: ONS Crown Copyright, Kantar Worldpanel
* calculated by multiplying 2009 UK turnover & GVA per employee by Wales employment and adjusting to 2013 levels using overall growth in food sector productivity
Trends
Employment has dropped in the current year but turnover has increased as a result of increasing productivity in the sector.
The vast majority of businesses (75%) are micro, with fewer than 9 employees up from 71%.
Those employing more than 50 people have fallen from 10% to 8% as the number of business units has grown from 155 to 180.
Long Term Consumer Trends
Over the last decade, total household consumption of bread has declined by 20%, with consumption of white bread down 43%. This has been offset slightly by an increase in other breads, including artisan and world breads.
In 2014 bread has continued to decline while other categories have stabilised.
Household Average Purchases of Bread and Bakery Products (grams per person per week)
Wales UK
2002/03 Average2 % change 2002/03 Average % change 012/14 2012/14
Bread 821 590 -28% 757 603 -20%
Cakes, Buns and Pastries 154 147 -5% 164 150 -9%
Biscuits and Crispbreads 167 156 -7% 174 165 -5%
Source: DEFRA, Family Food Statistics
Kantar Data
The retail spend on ambient bakery in Wales was £315m in the year to May 2015, marginally higher than 2014, but down 2.6% on 2013 values. Consumers are spending less on ambient bakery (down 5% to £183.61 per annum) and buying products less frequently than they were in 2013.
The biscuit market has remained stable, up 1.4% in 2015 compared to the year earlier- with the fall in value of chocolate biscuits and seasonal biscuits being offset by an increase in the value of savoury biscuits, special treats and toaster pastries. Retail spend on biscuits in Wales was £159m in year to May 2015.
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Drinks Sub Sector
Summary of the Sector
The Drinks sub sector in Wales:
includes beer, cider, whisky, water and soft drinks employs 1,900 people (2014) up from 1,500 in 2013 in 85 business units (2015) up from 75 in 2014 though industry estimates suggest 171 highlighting substantial growth in small operators with a turnover of £596m (2013) a Welsh retail sales value of £1,090m (2015) GVA of £285m (2013) and Exports of £9.3m (2015) up from £8.8m (2014) France, North America, Asia, Ireland and Netherlands being the top 5 destinations (2015).
The sector in Wales represents:
8.6% of all Wales Food and Drink Manufacturing employment 15.3% of Wales Food and Drink Manufacturing business units
Summary Statistics for Drinks Sub Sector
Wales UK (GB) Wales as % of UK (GB)
Number of Business Units 2015 85 1,800 4.7%
Proportion of Business Units medium and 7% 8% - large (50+ employees)
Employment 2013 1,900 38,030 (GB) 5%
Proportion of Full Time Employee Jobs 94% 92% (GB) -
Turnover 2013 £608m £13,881m 4.4%
GVA 2013 £285m £4,603m 6.2%
Retail Sales Kantar Worldpanel 2015 £1,090m £29,820 3.7%
Source: ONS Crown Copyright, Kantar Worldpanel
Trends
Employment has increased from a stable base of 1,500 to 1,900 employees. The number of businesses has continued to grow reaching 85, though this is below the latest industry estimates. 70% of businesses have less than 10 employees up from 67%.
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There are now no businesses listed in the 50-249 employee category. Long Term Consumer Trends
Across the UK there has been a strong increase in the household purchases of mineral and spring water, up 45% since 2003.
Within soft drinks, consumption of low calorie drinks have increased dramatically, with concentrated soft drinks (squashes) up 131% over the decade, and un-concentrated drinks up 28%. Conversely non low calorie drinks have seen consumption falling by 45% for squashes and 18% for others.
Household Average Purchases of Beverages (ml per person per week)
Wales UK
2002/03 Average % change 2002/03 Average % change 2012/14 2012/14
Mineral or Spring Water 232 230 -1% 210 304 45%
Soft Drinks 1,767 1,631 -8% 1,757 1,643 -6%
Alcoholic Drinks 759 622 -18% 726 703 -3%
Source: DEFRA, Family Food Statistics
Kantar Data
The retail spend on alcohol in Wales in the year to May 2015 was £714m, up 3.6% on the year earlier. Spending on beer and larger was down 5.8% to £131m, but spending on wine increased by 3.6% to £257m, and spirits up 7.7% to £221m.
Spend on water increased by 12% to £23m, and chilled drinks remained flat at £48m.
Dairy Sub Sector
Summary of the Sector
The Dairy sector in Wales:
has 290,000 dairy cattle across 1,760 herds (273,600 cattle across 1,790 herds in 2014).
Produces 1,801m litres of milk per year (1,671m in 2014)
employs 1,000 people in processing (2014) down from 1,600 in 2013
in 55 business units (2015) same as 2014
with a turnover of £596m (2013)
GVA of £117m (2013)
The Egg sector in Wales
Has 1.6m chickens used for egg production (was 2.1m in 2014), 80% in free range production
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Accounts for 4.4% of total UK hen numbers (was 5.7% in 2014), but a higher proportion of free range hens.
Combined Dairy and Egg sector
has Welsh retail sales of £680m (2015)
Exports of £109.5m (2015) down from £145m (2014) – Ireland, France, Belgium, Germany and Italy being the top 5 destinations (2015)
has 75 FSA approved premises (2016 down from 88 in 2015) but
does not include dairy farming or on-farm processing within an existing farm business
The sector in Wales represents:
4.7% of all Wales Food and Drink Manufacturing employment
10% of Wales Food and Drink Manufacturing business units
Summary Statistics for Welsh Dairy Sector
Wales UK (GB) Wales as % of UK (GB)
Number of Business Units 2015 55 730 7.5%
Proportion of Business Units medium and 18% 15% - large (50+ employees)
Employment 2014 1,000 20,463 (GB) 5.1%
Proportion of Full Time Employee Jobs 88% 91% (GB) -
Turnover 2013 £596m £10,015m 6%
GVA 2013 £117m £1,905m 6.1%
Retail Sales Kantar Worldpanel 2015 £680m £11,555m 5.9%
Source: ONS Crown Copyright, Kantar Worldpanel
Trends
Employment has continued to fall from 1,600 to just over 1,000 in 2014. However, the number of business units has remained stable and turnover has increased as a result of improved productivity in dairy processing.
The vast majority of businesses are micro or small, though around 20% employ over 50 employees.
The number of laying chickens has fallen sharply to 1.6m down from its peak in 2014 of 2.1m. Whilst annual census data is only a snapshot, this might reflect some farmers leaving the egg sector due to over supply. Wales has a disproportionately high proportion of free range laying hens compared with the UK average.
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Long Term Consumer Trends
Welsh purchases of milk and milk products (excluding cheeses) have declined since 2002/03, down 8%. However, purchases of semi-skimmed milk increased by 19%, and yoghurts were up 18%.
Total Welsh purchases of cheese have increased over the decade, up 3%, and egg consumption has remained constant. Welsh butter consumption has declined in contrast to the UK which has seen butter consumption increase back towards 1990s consumption levels.
Average Household Purchases of Dairy Products (grams per person per week)
Wales UK
Average % change Average % change 2012/14 2002/03 2012/14 2002/03
Milk and Milk Products (Excl 2,122 1,947 -8% 2,006 1,897 -5% Cheese) ml per person per week
Skimmed Milks (semi and fully 1,151 1,368 19% 1,085 1,224 13% skimmed)
Yoghurt and Fromage Frais 146 172 18% 163 191 17%
Cream 18 21 15% 20 23 15%
Butter 44 35 -21% 37 42 13%
Cheese 100 103 3% 112 113 1%
Eggs* 2 2 0% 2 2 0%
*rounded to the nearest whole egg
Source: DEFRA, Family Food Statistics
Kantar Data
The Welsh retail spend on dairy products was £613 million in the year to May 2015, marginally lower than the year earlier. Of which, the cheese market was worth £156m, milk £190m, yogurt £85m and butter £44m.
The total spend on milk was down 3.4% on the year earlier, despite volumes increasing by 2.8% illustrating the impact of retailer price competition on the consumer price for milk.
The yogurt market increased in value by 2.4% year on year, and up 6.5% since 2013, with individual consumers spending £31.94 on yogurt annually.
Butter is bought by 74% of households, and has seen strong growth with market value up 5.9% in the year to May 2015, and 9% higher than 2013.
Wales retail spend on eggs was £48m in 2015, down 1.9% on 2014.
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Total volume of eggs bought was up 9% compared with 2014. The increase in volume and reduction in spend reflects the price competition at the retail level.
Grains and Starch Sub Sector
Summary of the Sector
The Grains and Starch sub sector in Wales:
has 87,500 hectares of land for arable crops, up from 85,000 in 2014 equivalent to 6% of utilised agricultural land, compared with 43% in England (2015) same as 2014 wheat is the main arable crop, accounting for 25% of land use, followed by spring and winter barley accounting for 25% (2015) up from 24% in 2014 employs 900 people (2014) down from 1,100 in 2013 in 10 business units (2015) same as 2014 with a turnover of £357m (2013) retail sales of £348m (2015) GVA of £97m (2013) exports of £42.7m (2015) up from £40.8m (2014) France, Ireland, Sweden, North America and Asia being the top 5 destinations (2015) and One Welsh miller with NABIM membership.
The sector in Wales represents:
4% of all Wales Food and Drink Manufacturing employment 2% of Wales Food and Drink Manufacturing business units
Summary Statistics for Grains and Starch Sub Sector
Wales UK (GB) Wales as % of UK (GB)
Number of Business Units 2015 10 230 4.3%
Proportion of Business Units medium and 50% 26% large (50+ employees)
Employment 2014 900 10,500 (GB) 8.6%
Proportion of Full Time Employee Jobs 96% 92% (GB) -
Turnover 2013 £357m £3,354m 10.6%
GVA 2013 £97m £882m 11%
Retail Sales Kantar Worldpanel 2015 £348m £5,961 6%
Source: ONS Crown Copyright, Kantar Worldpanel
Trends
Employment has fallen back from 1,100 to 900, though still above the 2009 level. The number of business units is stable but productivity has increased in the sector.
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Long Term Consumer Trends
Household purchases of breakfast cereals have fallen back in the latest data. Rice has grown strongly in Wales at 61% versus 10% across the UK. Pizza has also grown more strongly in Wales. Other cereal convenience foods have grown more slowly in Wales. Whilst consumption of breakfast cereals has declined, there has been very strong growth in oats and oat products, which are up 90% across the UK and an increase in mueslis.
Household Average Purchases of Cereals and Cereal Products (grams per person per week)
Wales UK
Average2 % change Average2 % change 012/14 012/14 2002/03 2002/03
Breakfast Cereals 135 117 -13% 132 128 -3%
Rice 46 74 61% 84 92 10%
Pasta 77 84 9% 88 89 1%
Pizza 47 65 38% 66 79 19%
Other Cereal Convenience 66 70 6% 73 81 11% Foods (incl snacks)
Source: DEFRA, Family Food Statistics
Kantar Data
Total spend on breakfast cereals in Wales was down 4.2% in the year to May 2015, to £98m. Cereal and fruit bars grew strongly by 11.3%, having declined in 2014, with total spend of £17.7m in 2015. Year on year spend on pasta has increased, with dry pasta up 8.9% to £11.8m and fresh up 8.2% to £7m. The ambient rice and savoury noodles market also experienced strong growth, with spend up 8.1% to £29m in 2015. The popcorn market has continued to grow, with year on year spend up 21% to £3.5m in 2015 as more households are purchasing popcorn, up from 32% in 2013 to 41% in 2015.
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Prepared Animal Feeds Sub Sector
Summary of the Sector
The Prepared Animal Feeds sub sector in Wales:
includes farm animal, horse and pet food employs 800 people (2014) same as 2013 in 30 business units (2015) same as 2014 has four major pet food businesses (2015) with a turnover of £356m (2013) retail sales of £183m (2015) GVA of £95m (2013) and exports of £10.8m (2015) up from £9.7m (excluding unmilled cereals) (2014) Germany, Ireland, Western Europe (Outside EC), Czech Republic and Spain being the top 5 destinations (2015). Two thirds of the businesses are small. However, the remainder employ between 50-249 employees. Two are members of the Pet Food Manufacturers Association.
The sector in Wales represents:
4% of all Wales Food and Drink Manufacturing employment 5% of Wales Food and Drink Manufacturing business units
Summary Statistics for the Prepared Animal Feeds Sub Sector
Wales UK (GB) Wales as % of UK (GB)
Number of Business Units 2015 30 550 5.5%
Proportion of Business Units medium and 17% 16% - large (50+ employees)
Employment 2014 800 13,100 (GB) 6.1%
Proportion of Full Time Employee Jobs 94% 90% (GB) -
Turnover 2013 £356m £6,904m 5.2%
GVA 2013 £95m £1,789m 5.3%
Retail sales Kantar Worldpanel 2015 £183m £2,544m 7.2%
Source: ONS Crown Copyright, Kantar Worldpanel
Trends
Employment has stabilised between 2013 and 2014 following growth since 2009. The number of Welsh business units has also stabilised. Within GB, business units have declined consistently; but overall employment growth suggests that remaining businesses are getting bigger.
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Kantar Data
The total household retail spend on animal feed in Wales in the year to May 2015 was £183m, up 6% on 2014. Spend on dog food was £57.6m, of which £43m was wet food (e.g. tinned) and £89m spent on cat food. The spend on dog and cat treats was £35m, up 6.6% on the year earlier.
Fruit, Vegetables and Plants Sub Sector
Summary of the Sector
The fruit, vegetables and plants sub sector in Wales: Accounts for 1,599 hectares of land (1,694 in 2014) employs 200 people in processing (2014) same as (2013) in 25 business units (2015) same as 2014 with a turnover of £38m (2013) GVA of £12m (2013) Retail sales of £807m (2015) exports of £4m (2015) down from £4.7m (2014) Ireland, Spain, Asia, Western Europe (Outside EC) and Czech Republic being the top 5 destinations (2015) but does not include jobs in growing of fruit, vegetables and plants does not include primary processing on-farm census data excludes small units of less than 2 hectares Horticulture Wales estimates that up to 70% of Welsh horticulture business activity is not captured
The sector in Wales represents:
1% of all Wales Food and Drink Manufacturing employment 4.5% of Wales Food and Drink Manufacturing business units
Summary Statistics for Fruit and Vegetables Processing Sub Sector
Wales UK (GB) Wales as % of UK (GB)
Number of Business Units 2015 25 640 3.9%
Proportion of Business Units medium and 0% 17% - large (50+ employees)
Employment 2014 200 28,400 (GB) 0.7%
Proportion of Full Time Employee Jobs 93% 93% (GB) -
Turnover 2013 £38m £6,309m 0.6%
GVA 2013 £12m £1,984m 0.6%
Retail Sales Kantar Worldpanel 2015 £807m £13,891m 6%
Source: ONS Crown Copyright, Kantar Worldpanel 49 | P a g e
Trends
The area of horticultural land has dropped back slightly in 2015 after steady increases in previous years. The number of jobs and business units has remained stable in Wales while GB has seen the number of business units increase while employment has remained relatively stable. Turnover has dropped slightly.
Long Term Consumer Trends
There has been a fall in the household per capita consumption of fruit and vegetables over the past decade within Wales, and Welsh per capita consumption of vegetables is slightly less than the UK average.
There has been a sharp fall in the consumption of potatoes (especially fresh potatoes) - possibly as the consumption of other carbohydrates (rice and pasta) has increased. This fall is greater than that seen in the UK
Household Average Purchases of Fruit and Vegetables (grams per person per week)
Wales UK
2002/03 Average2 % change 2002/03 Average2 % change 012/14 012/14
Fresh and Processed Vegetables 1,071 1,015 -6% 1,101 1,071 -2% (excl Potatoes)
Fresh and Processed Potatoes 1,001 730 -27% 873 723 -17%
Fresh and Processed Fruit 1,026 963 -6% 1,206 1,081 -10%
Source: DEFRA, Family Food Statistics
Kantar Data
The retail spend on fruit, vegetables and salads in Wales was £629m in the year to May 2015, down 2.1% on the previous year. Whilst the retail spend on fruit was up 3.5% to £277m, spend on vegetables fell sharply by 7.9% to £293m. However, the total volume of vegetables sold was up but individual customer spend was down.
Spend on chilled prepared salads was down to £17m from £18m in 2014.
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Seafood Sub Sector
Summary of the Sector
The seafood sector in Wales:
has a fleet of 466 boats, 40 being over 10m in length (2014) (477 boats and 35 >10m in 2013) has seafood landings of 9,900 tonnes worth £13.4m – 10.3m being shellfish (2014) (13,300 tonnes worth £16.5m - £11.6m being shellfish (2013)) produces a further 9,000 tonnes of farmed shellfish worth £9m, employing 34 people (2012 – no updated data but industry estimates suggest production is now around 6,500 tonnes). produces 453 tonnes of other farmed fish worth £1.44m, employing 100 people (2012 – no update but industry estimates suggest this figure has declined substantially) has 57 FSA approved premises (65 in 2015) retail sales of £142m (2015) exports £29.3m (2015) down from £35.6m (2014) Spain, Asia, Netherlands, France and Ireland being the top 5 destinations (2015) according to official data employs 100 people in processing (2014) in 10 business units (2015) with a turnover of £18m (2012) and GVA of £4m (2012) however, industry estimates suggest at least another 50 small processing businesses across Wales with combined turnover of £5m and employment of 50-100 people (2014)
The sector in Wales represents:
0% of all Wales Food and Drink Manufacturing employment 2% of Wales Food and Drink Manufacturing business units
Summary Statistics for Welsh Seafood Processing Sector
Wales UK (GB) Wales as % of UK (GB)
Number of Business Units 2015 10 370 2.7%
Proportion of Business Units medium and 0% 15% - large (50+ employees)
Employment 2014 100 14,670 (GB) 0.7%
Proportion of Full Time Employee Jobs 87% 89% (GB) -
Turnover 2013 £18m £2,796m 0.6%
GVA 2013 £4m £531m 0.8%
Retail Sales(2015) Kantar Worldpanel £142m £2,635m 5%
Source: ONS Crown Copyright, Kantar Worldpanel
Trends
Sector statistics are similar to the previous year, though volumes have declined. There are few businesses and all are small, employing fewer than 10 employees. The total number of business units has remained relatively constant, however, a degree of caution is required as data relating to the number of business units is rounded to the nearest five. 51 | P a g e
Seafish research has identified a number of processors who may not be captured in the data above.
Long Term Consumer Trends
There has been a decline in the average household purchases of fish per person in Wales, 13% lower than 2002/3, compared with an 8% decline in the UK. Welsh consumption of Shellfish has remained stable compared to a 9% decline across the UK.
Household Average Purchases of Fish (grams per person per week)
Wales UK
2002/03 Average2 % change 2002/03 Average2 % change 012/14 012/14
Fish 149 130 -13% 155 142 -8%
Shellfish 9 9 0% 11 10 -9%
Source: DEFRA, Family Food Statistics
Kantar Data
Retail spend on fresh fish in Wales in the year to May 2015 was £62m, up 10% since 2013. Spend on shellfish was up 9% on 2013 at £8.4m. There was a fall in the spend on frozen fish, down 3% on a year earlier to £46.7m and canned fish down 6.6% to £33.2m.
Oils and Fats Sub Sector
Summary of the Sector
The sector is too small to disclose any business or employment data.
Exports were £1.1m (2015) up from £0.98m (2014) North America, Poland, Western Europe (Outside EC), Germany and Ireland being the top 5 destinations (2015).
Long term Consumer Trends
There has been a decline in the consumption of fats nationally, down 22% in Wales ahead of the UK.
Whilst consumption of butter has fallen in Wales by 20%, against a very strong rise in margarine consumption (up 286%), across the UK butter consumption has increased 14%. Similarly the consumption of oils has increased slightly across the UK, but fallen steeply in Wales
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Household Average Purchases of Oils and Fats (grams per person per week)
Wales UK
2002/03 Average2 % change 2002/03 Average2 % 012/14 012/14 Change
Fats 198 155 -22% 190 168 -12%
Butter 44 35 -20% 37 42 14%
Margarine 7 27 286% 13 22 69%
Vegetable and Salad Oils 53 43 -19% 56 55 2%
Source: DEFRA, Family Food Statistics
Kantar Data
Total retail spend on butter in Wales has increased by 9% in the year to May 2015, to £44.2m, with volume growth as well – counter to the long term trends in consumption. Sales of margarine were down 8.1% to £40m, with a 5.6% decline in volume. Spend on cooking oils was down year on year by 2% to £17.8m, despite an increase in the volume of sales.
Other Food Products Sub Sector
Summary of the Sector
The sub sector captures businesses in the following manufacturing activities: sugar, cocoa, chocolate, confectionary, tea, coffee and coffee substitute manufacturing, condiments and seasonings, prepared meals and dishes, and homogenised food preparation and dietetic food.
The Other Food Products sub sector in Wales:
employs 5,300 people (2014) down from 5,500 in 2013 in 95 business units (2015) up from 90 in 2014 with a turnover of £938m (2013) retail sales of £645m (2015) GVA of £347m (2013) exports of £27m (2015) up from £19.3m (2014) North America, Ireland, France, Spain and Germany being the top 5 destinations (2015) and a high degree of innovation given 7 of the 15 Welsh Great Taste Awards 2014
Whilst most businesses are small, 21% employ more than 50 employees, similar to last year.
The sector in Wales represents:
24% of all Wales Food and Drink Manufacturing employment up from 23%
17% of Wales Food and Drink Manufacturing business units same as last year
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Summary Statistics for Other Food Products Sub Sector
Wales UK (GB) Wales as % of UK (GB)
Number of Business Units 2015 95 1,800 5.3%
Proportion of Business Units medium and 21% 15% - large (50+ employees)
Employment 2014 5,300 88,600 6%
Proportion of Full Time Employee Jobs 92% 90% (GB) -
Turnover 2013 £938m £16,760m 5.6%
GVA 2013 £347m £5,986m 5.8%
Retail Sales (2015) Kantar Worldpanel £645m £10,712m 6%
Source: ONS Crown Copyright, Kantar Worldpanel
Trends
Following a period of sustained employment growth, employment has dropped slightly in 2014. Most employees, (92%) are in full-time employment ahead of GB. The number of business units has increased from 90 to 95. Increased productivity means that turnover has increased from £918 to £938m.
Purchases of sugar and preserves have declined steeply, but this is counterbalanced by strong growth in pickles and sauces. Wales has seen a decline in confectionery while the UK has increased.
Household Average Purchases of Other Products (grams per person per week)
Wales UK
2002/03 Average2 % change 2002/03 Average % change 012/14 2012/14
Sugar and Preserves 164 117 -29% 146 118 -19%
Pickles and Sauces 122 129 6% 123 129 5%
Confectionery 142 137 -4% 127 132 4%
Source: DEFRA, Family Food Statistics
Kantar Data
The retail spend on preserves in Wales was £10.5m in the year to May 2015, down 1.5% Pickles, chutneys and relishes were also down to £5.6m from £6.4m in 2013. The total chocolate confectionary market remained unchanged at £161.3m and spend on sugar confectionary £43.9m The total sweet home cooking market was down 2.4% to £87.9m in the year to May 2015
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Food and Drink Wholesale Sub Sector
Summary of the Sector
The Food and Drink Wholesale sub sector in Wales:
employs 6,000 people (2014) down from 7,200 in 2013 in 660 business units (2015) down from 675 in 2014 with a turnover of £954m (2013) and GVA of £209m (2013)
The sector in Wales represents:
0.46% of all Wales employment 0.55% of the total number of business units in Wales
Summary Statistics for Welsh Food and Drink Wholesale Sub Sector
Wales UK (GB) Wales as % of UK (GB)
Number of Business Units 2015 660 19,400 3.4%
Proportion of Business Units medium and 3% 4.8% - large (50+ employees)
Employment 2014 6,000 230,100 (GB) 2.6%
Proportion of Full Time Employee Jobs 87% 85% (GB) -
Turnover 2013 £954m £108,827m 0.9%
GVA 2013 £209m £10,434m 2%
Source: ONS Crown Copyright
Trends
Employment has declined again though it is still above the 2011 level which was a low point. The number of business units has also fallen slightly. 77% of businesses have less than 10 employees same as last year. There are 20 businesses in the 50-249 employee category, same as last year.
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Food and Drink Retail Sub Sector
Summary of the Sector
The Food and Drink Retail sub sector in Wales:
employs 62,500 mostly part time people (2014) down from 69,600 in 2013 in 3,745 business units (2015) up from 3,635 in 2014 with a turnover of £7,600m (2013) GVA of £1,294m (2013) and retail sales of £5,463m (Kantar 2015)
The sector in Wales represents:
14% of all business units in Welsh Food and Drinks same as last year 28% of total employment in Welsh Food and Drinks down from 30%
Summary Statistics for Retail Sector
Wales UK (GB) Wales as % of UK (GB)
Number of Business Units 2015 3,745 78,810 4.7%
Proportion of Business Units medium and 4.2% 4.3% - large (50+ employees)
Employment 2014 62,500 1.16m (GB) 5.4%
Proportion of Full Time Employee Jobs 30% 37% (GB) -
Turnover 2013 £7,600m £166,203m 4.6%
GVA 2013 £1,294m £31,802m 4.1%
Retail Sales (2015) Kantar Worldpanel £5.463bn £104.8bn 5.2%
Source: ONS Crown Copyright, Kantar Worldpanel
Trends
Following a recovery, employment has dropped back significantly.
While there had been a recovery in full time jobs, part time jobs have also grown.
The number of business units has continued to grow.
Retail sales by sub sector in order of value in Wales are summarised in the following table for 2013-2015:
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Total Retail Sales in Wales 2013-2015 (Kantar Worldpanel)
£000 2013 2014 2015 2015 on 2014 2015 on 2013
Drinks 1,046,764 1,060,336 1,089,424 3% 4%
Meat 1,040,490 1,054,551 1,058,655 0% 2%
Fruit & veg 809,628 821,438 806,681 -2% 0%
Dairy 678,326 681,265 680,435 0% 0%
Bakery 512,938 506,350 509,721 1% -1%
Cereals 337,889 343,931 348,062 1% 3%
Animal feed 174,852 172,138 183,113 6% 5%
Seafood 137,688 146,014 142,396 -2% 3%
Other 628,426 641,229 645,106 1% 3%
Total 5,367,000 5,427,251 5,463,592 0.7% 1.7%
Catering Sub Sector
Summary of the Sector
The catering sub sector captures all non-residential catering, including restaurants and cafes, foodservice, mobile caterers, take away, and events catering.
The catering sub sector in Wales:
employs 70,300 people mostly part time (2014) up from 69,300 in 2013 in 8,200 business units (2015) up from 7,400 in 2014 with a turnover of £1,885m (2013) GVA of £867m (2013) Annual spend on out of home consumption estimated at £2.2bn (YE March 2015 NPD Crest)
Almost all businesses are micro or small (99%) employing fewer than 50 employees and the sector has a high proportion of part time employment, accounting for 65% of employee jobs, down from 70%.
The sector in Wales represents:
32% of all Wales Food and Drink Industry employment
31% of Wales Food and Drink Industry business units
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Summary Statistics for the Catering Sub Sector
Wales UK (GB) Wales as % of UK (GB)
Number of Business Units 2015 8,200 165,420 5%
Proportion of Business Units medium and 1.5% 2% - large (50+ employees)
Employment 2014 70,300 1,551,500 (GB) 4.5%
Proportion of Full Time Employee Jobs 35% 40% (GB) -
Turnover 2013 £1,885m £56,811m 3.3%
GVA 2013 £867m £27,003m 3.2%
Source: ONS Crown Copyright
Trends
The number of business units has risen in Wales following marginal decline over the past five years. Employment has also increased following a rise of 7% between 2009 and 2013. Within the UK, ‘Out of Home’ spend increased by 2% in 2014, equating to £50.8bn, driven by increased prices (1%), and increase in visits (0.9%)3. Out of home spend in Wales increased by 5.1% to £2.2bn, driven by an increase in spend, with both an increase in average price per unit (up 1.5%) and number of items purchased (up 3.3%) The proportion of full time jobs has increased from 30% to 35%, though this is below the GB level.
Disclaimer
This compendim of statitistics was produced by Brookdale Consulting between May-June 2016.
3 NPDCrest Whilst facts have been rigorously checked, Brookdale Consulting and the Welsh Government can take58 no | P a g e responsibility for any damage or loss suffered as a result of any inadvertent inaccuracy within this report.
Animal Health and Welfare Framework
The Wales AHWF sets out the plan for delivering continued and lasting improvements in standards of animal health and welfare for kept animals. It also helps to protect public health and making a contribution to the economy and the environment.
The long term vision for animal health and welfare in Wales is described through five strategic outcomes:
Wales has healthy productive animals Animals in Wales have a good quality of life People trust and have confidence in the way food is produced and the way public health is protected Wales has a thriving rural economy Wales has a high quality environment.
The way we work towards achieving our vision for animal health and welfare in Wales is guided by five key principles which are fundamental to our approach:
Promoting the benefits of animal health and welfare; prevention is better than cure Understanding and accepting roles and responsibilities Working in partnership Ensuring a clearer understanding of costs and benefits Delivering and enforcing standards effectively.
The AHWF contributes to the Wellbeing goals
Goal Animal Health and Welfare Framework
A prosperous Wales Healthy livestock kept to high standards of welfare supports marketing and trade opportunities and helps farmers increase profit margins as well as sustain and create jobs. An outbreak of animal disease incurs direct and indirect economic impacts which can lead to substantial cost and disruption.
A resilient Wales One of the key principles underpinning the Wales AHWF is that prevention is better than cure to minimise the risk of disease through:
Robust contingency planning
Robust business continuity plans
Robust and speedy response to welfare incidences to negate further intensive interventions.
A healthier Wales Controlling and eliminating animal disease contributes towards safer food and improved public health. Minimising the risk to people from diseases such as, for example, salmonella can help reduce the demand on health services. Animals can also contribute to the well-being of people both mentally and
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physically
A more equal Wales A society that enables people to fulfil their potential no matter what their background or circumstances (including their socio economic background and circumstances).
A Wales of cohesive Minimising the impact of animal disease helps protect rural communities by communities sustaining profitable farm businesses – helping to safeguard and create jobs.
A Wales of vibrant Implementation of the Wales AHWF will comply with the Welsh culture and thriving Government’s commitment towards the Welsh Language through the Welsh Welsh Language Language Standards.
A globally responsible A serious and growing concern in both veterinary medicine and global public Wales health is Antimicrobial Resistance (AMR). There is commitment through the Wales AHWF to support the UK Government’s five year AMR Strategy.
Access to Labour
According to the Royal College of Veterinary Surgeons, as at 8 February 2017, there were 1,160 UK- practising veterinary surgeons who have their registered address based in Wales.
The following is a breakdown of country of qualification for the UK-practising veterinary surgeons. This table is also attached for ease of reference.
Country of original qualification Count (Non-UK) EU
Argentina 1 0
Australia 13 0
Austria 2 2
Belgium 7 7
Bulgaria 4 4
Canada 1 0
Czech Republic 3 3
Denmark 1 1
England 709 0
Finland 1 1
Germany 14 14
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Greece 4 4
Grenada 1 0
Hungary 11 11
Ireland 30 30
Italy 25 25
Latvia 1 1
Lithuania 3 3
New Zealand 1 0
Nigeria 2 0
Norway 2 0
Poland 30 30
Portugal 13 13
Romania 24 24
Scotland 156 0
Slovakia 12 12
Slovenia 1 1
South Africa 15 0
Spain 55 55
St Kitts 1 0
Switzerland 1 0
The Netherlands 10 0
USA 3 0
Zimbabwe 3 0
241
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Wales does not appear in this chart because Wales does not currently have any universities offering veterinary degrees and this chart relates to country of graduation rather than country of origin or nationality.
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Fisheries and Seafood
The economic importance (GVA) of fisheries is relatively small compared to the UK, but disproportionately important to those who are often based in isolated and deprived areas which are reliant on fishing and related industries.
The ONS’ Annual Business Survey for the UK for 2014 estimated the fishing and aquaculture sector GVA to be £582m and the processing and preserving of fish, crustaceans and molluscs to be £707m with a total contribution to the economy of £,1289m. This means the marine fishing, aquaculture and processing sectors together accounted for 0.08% of the UK economy.
Wales share of the fishing and aquaculture GVA is estimated as £18m (3% of the UK). Data for processing is not available.
At UK level the fishing, aquaculture and fish processing sectors account for 34,600 jobs. Within Wales the employment level is only about 1,000 (about 900 in fishing, 100 in aquaculture and 100 in processing). In 2014, 466 fishing vessels were registered in Wales (426 under 10m and 40 over 10m). These employed 850 commercial fishers of which 547 were regular fishers and 303 were part time. In 2014 £2.8m of fish and £12m of shellfish (mainly scallops, whelk, crab and lobster) were landed into Wales by UK vessels.
In aquaculture, Wales is the UK leader in seabed mussel production, the larger companies using purpose- built, state of-the-art mussel dredgers.
The economic activity generated by all subsectors of the fishing sector and their supporting industries (such as cargo handling, ship repairs etc) means that the sector provides economic activity that is important to local coastal communities. In addition to this, many coastal communities are heavily reliant on tourism, in which the artisanal fleet plays a key part.
Access to markets
In 2015, Welsh seafood exports were worth £29.2m, down 18% from £35.6m in 2014. Spain was the main destination at 57% followed by South Korea at 14%, Netherlands 12% and France 11%. Welsh exports account for 22% of total UK seafood export value.
% of UK % Main export harvest exported destinations
% of UK’s cockle production 22 90 Spain, Netherlands, France
% of UK’s scallop production 9.2 majority Spain, France
% of UK’s whelk production 22 100 South Korea, Malaysia
% of UK’s mussel production 34 90 Netherlands, France
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The Welsh Government has plans to double Wales’ annual finfish aquaculture output, from 1,000 tonnes to 2,000 tonnes by 2020, and shellfish aquaculture production from 8,000 tonnes to 16,000 tonnes. Wales has around of 32,000 km2 of sea, as well as 21,000 km2 of land.
Access to capital
In terms of our fisheries interests, we could be affected by any changes to foreign direct investment. There is significant Dutch interest in Welsh mussels, for example, while there is Spanish interest in merchants who buy live crab and lobster for export from Wales. However, there is no specific capital concentration in the sector.
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Forestry and Timber
The forestry sector in Wales has an annual GVA of £499.3 million and employs between 8,500 and 11,300 people. Agriculture occupies around 80% of Welsh land compared to 14% for Forestry.
Access to markets
UK and Wales are roughly 20 to 25% self sufficient in timber. 75% to 80% is imported. The majority of Welsh timber products after primary processing are marketed in the UK. Timber prices in the UK are in effect set by the price of imports – mainly of sawn softwood timber from the EU.
Figures for exports and imports for the forest industry in Wales are not available separately. The position can safely be taken as pro-rata tracking the UK position. Wales has a relatively small share on paper of the UK totals but that figure needs to be treated with caution, because many mills just along the border may be processing English wood in Wales or Welsh wood in England. Purely on the basis of the wood harvest (technically wood removals) Wales represents 12.8% of the UK figures.
Wood products imported into the UK in 2014 were valued at £7.2 billion and included 6.4 million cubic metres of sawnwood, 3.3 million cubic metres of wood-based panels, 7.0 million cubic metres of wood pellets and 5.9 million tonnes of paper. UK production of roundwood for the same period was 11.4million cubic metres. The value of domestic production is not measured in the same way as imports but we know that the GVA from UK production of primary wood products is £1.4billion and if secondary products such as pulp and paper are included this rises to £6.3bn
A further factor is that these figures are just for one year and we would get a better picture if we looked at longer term averages – changes in stocks can have a significant impact on the actual proportion of timber that is imported in a given year.
We are not likely to have an over-supply of any timber product in the UK context. There are a couple of potential pressure points that might arise.
Wood Panel Products including chipboard – the UK is close to self sufficient in these products. They cover mainly kitchen furniture, work tops, bedroom furniture. They consist of wood panels (MDF, Chipboard, OSB) which are laminated with plastic or wood veneer. Wood panel industry companies are often highly integrated and trade across the EU – so may be impacted by tariffs that applied to component parts. They do not rely on exports from the UK but neither is there significant import to the UK of these products. This may mean that unlike the rest of the sector they will not get a boost to their prices in the domestic market as a result of tariffs being applied to EU goods coming into the UK. They are also likely to be sensitive to supply side pressures – see below.
Wood fuel – there has been a significant increase in the imports of wood fuel into the UK. The quantity of wood fuel imports has risen from nil in 2008 to over 7 million cubic metres in 2014 – this is now the single largest category of imports. Much of this has been driven by a few large companies like Drax power. These imports come from both within the EU and from elsewhere. If these (wood fuel) imports become subject to tariffs then the importing companies may be pushed to start using more domestic supplies. This is not likely to be a linear effect because the supply chain and logistic implications of making a change but it could have a major impact on UK and Wales wood supply. Forest owners would be winners – existing sawmills and panel industry would be losers in this scenario.
The wood fuel industry has largely been driven by UK government energy policies so to the extent that these change, there may be further impacts and uncertainty on prices. There has been a significant pull-through effect
65 | P a g e from small scale biomass incentives that has started to have a positive effect on Welsh Government objectives to bring woodland into some form of management but the impact in England has been felt more directly.
The UK is a net importer of wood products. Access to imports of softwoods from EU sources would be a significant ask in our negotiations.
Access to labour
There is limited hard data on the provenance of labour and the main discussion in the industry has been about casual migrant labour. There is some use of casual workers from the EU, mainly within the forest nursery trade. There is also some evidence of long term EU residents working in more skilled positions within the forestry and sawmilling sector. These skilled workers are not yet fully on the radar for forestry businesses because they are treated as in effect “naturalised” although in many cases they may not be. Our sense is that the number is not large but the impact could be significant if the status of long term EU citizens resident and employed in the UK is brought into doubt.
Access to capital
The majority of investment in the forestry sector is carried out by UK based family businesses. So they do not rely heavily on Foreign Direct Investment. However their main challenges in raising capital relate to the long term nature of the forestry industry – returns to woodland owners and woodland businesses are based on investment in woodland planting carried out many years ahead of returns.
Landscape, Culture, Tourism , Recreation - Wellbeing
Woodland and Forestry also have an impact on the landscape and culture of Wales as well as economic impacts on tourism and recreation. These contribute to health and wellbeing as well as providing environmental and sustainability benefits.
For example studies by Forest Research demonstrated how tourism providers make direct and indirect use of woodlands to:
create positive imagery of tourist areas and tourism enterprises increase the diversity and depth of visitor experiences increase the accessibility of their products and services
In this way, woodlands form an integral part of the products and services offered by the rural tourism sector and play a role in enabling enterprises to attract visitors, encouraging people to stay longer and extending the length of the tourism season. The research also found that forestry policy and practices have knock-on effects on the success of tourism enterprises and the competitiveness of the leisure sector, for example by affecting the quality of products and services tourism providers are able to offer.
Woodlands can also make a contribution to social sustainability via engagement with local communities. The Cyncoed project (WG /NRW managed, EU Funded) showed that by funding community groups that wanted to plant new woods or improve woods in their neighbourhood to support activities such as improving the condition of woods, opening up woods with new paths, signs and benches, artwork in and around woods, buying land, tree planting and developing forest facilities provided local benefits such as forest schools, woodland-based businesses or recreation facilities.
There is considerable social value for people in Wales in managing local woodlands; community members are able and willing to participate in local processes of decision-making, finding it an empowering and cohesive experience.
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More that 50% of the people involvement in Cydcoed reported that it had considerably improved their overall health and well-being. This is particularly important for projects in the South Wales Valleys where health deprivation is among the highest in Britain.
Urban
Urban and semi-urban woodlands are also important in making contributions to both economic and wellbeing objectives. On the economic side the amenity value of woodland views capitalised in property prices could be very significant. GIS-based viewshed methodology has been used by Forest Research to estimate numbers of households with woodland views and apply the method to data to estimate the aggregate value of associated visual amenity benefits. In 2010 this figure for Wales was estimated at £33 million.
Data & findings for Wales
Total area (ha) 2,122,476 Total woodland area (ha) 254,924 Woodland area within urban areas or within 300 m of 10,130 urban boundaries (ha) Total broadleaved area (ha) 79,132 Broadleaved area within urban areas or within 300 m 6,657 of urban boundaries (ha) Urban area (ha) 67,643 Urban population (millions) 2.49 Urban population with views of broadleaved woodland 251,072 (10 %) (% of total) 2 Aggregate value (£ millions) 33
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Extracts from SoNaRR (State of Natural Resources Report) 2016
Key facts: Economic, social and cultural benefits of Wales’ Natural Resource
Wales’ natural resources provide us with many economic, social and cultural benefits. For example:
• £385 million from agriculture to the Welsh economy every year
• 951 million litres of drinking water per day
• 1.5 million tonnes of green timber a year, making construction easier and cheaper
• £499.3 million from woodlands each year
• 14 million tonnes of aggregates per year, for construction and other uses
• 8,919 gigawatt hours of energy from renewable sources, and rising, creating a renewable energy industry that employs 2,000 people
• 410 million tonnes of carbon stored in soil to soak up emissions and protect against climate change
• £2,870 million in tourism to Wales
• 28% of adults meeting the recommended level of physical activity through outdoor pursuits
• £18.2 million in health benefits to people from walking the Wales Coast Path
• £840 million and 30,000 jobs from the historic environment sector
Main Points from the Report
NRW has described the conclusions of the report as a ‘wake-up-call’ stating that it is ‘unlikely that ecosystems across Wales have sufficient resilience and this will impact on their capacity to provide services and benefits into the future’. The key findings are that:
• Many plants and animal species are in decline.
• Wales failed to meet its 2010 international and national biodiversity targets, and in many cases the decline has continued.
• In terms of ecosystem resilience, diversity is declining as shown by loss of habitats and species. The ‘extent’ of some habitats has declined significantly, ‘condition’ shows mixed results, and ‘connectivity’ has greatly reduced. All habitats have problems with all four attributes of resilience.
• There are broad, regional variations in ecosystems that reflect historical land use and habitat loss, with diversity, extent and connectivity tending to be relatively high in upland and coastal regions, low in lowland regions and especially low along major river valleys.
• The conditions of mountains, moorland and heaths are a significant concern for their long term resilience.
• A range of issues is contributing to reducing the resilience of Wales’ ecosystems. This affects the delivery of ecosystem benefits, which in turn impacts on people’s wellbeing.
• The full value of natural resources and ecosystems is not being adequately taken into consideration in various decision-making processes.
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• Whilst much evidence and data has been drawn upon in production of the report, there are still significant gaps in data
Opportunities to manage risks through maintaining and enhancing the resilience of ecosystems
At a Wales-wide scale, the evidence in the Risk Register highlights a number of risks to our well-being that need to inform the development of the National Natural Resources Policy (NNRP) and Area Statements. As Chapter 7 sets out, it is difficult to summarise or prioritise those risks without further dialogue with stakeholders about where the risks are arising and how severe the likely impacts could be.
One way of managing risks is by removing the pressure or negative impact altogether. Because of the complexity of drivers (as set out in Chapter 2), that is not normally a viable option. However, for every risk there is an opportunity.
By combining the opportunities to address risks by building more resilient ecosystems with the key failings and risks set out in the Risk Register alongside the ecosystems most likely to be affected and then considering the ecosystems that provide potential opportunities for risks to be addressed, we can therefore identify some of the key opportunities for Wales to manage natural resources more sustainably
It is important to consider the ways these opportunities can be taken forward in order to optimise their contribution to the well-being goals. Many of the issues will need joined-up thinking to achieve this, and will require solutions that integrate across sectors – such as managing our water. Some of the issues will be associated with deeply ingrained challenges linked to market forces or cultural and behavioural issues (for example, dealing with waste and energy efficiency). Some will require a completely different approach to management, others may just require a tweak in the way that we currently manage our natural resources.
Considering the potential contribution natural resources could make to well-being, a number of key priorities emerge. These do not prescribe, but rather capture a series of potential actions that, if taken forward, would maintain and enhance the resilience of ecosystems and optimise the benefits for well-being. These are:
• Increased green infrastructure in and around urban areas, (including urban trees and sustainable drainage)
• Increased woodland cover and more existing woodlands brought into appropriate management to deliver multiple benefits
• Coastal zone management and managed realignment
• Working within whole catchments to manage nutrients, and maintain, enhance and restore floodplains and hydrological systems
• Better soil management for carbon storage, water quality and continued productivity
• Better utilisation of our uplands (mountains, moorlands and heaths) to deliver multiple benefits
• Integrated management of marine ecosystems through a plan-led system that facilitates better understanding of the benefits of marine natural resources and optimises their use
In addition, global climate change poses risks to the whole range of Wales’ natural resources and ecosystems. Adapting to climate change is, therefore, a key priority if current levels of ecosystem services are to be maintained or enhanced. All of the above actions provide opportunities for adaptation.
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Also evident is that many of the opportunities for better management of ecosystems occur in locations distant from where the problems originate. This highlights the need to take a targeted approach to management and to integrate delivery at the appropriate scale (a key principle of sustainable management).
These emerging opportunities chime with the results of a recent UK study and underline the need for intervention by Government and others to secure the sustainable management of natural resources in Wales.
The UK study found there was good evidence, in terms of both costs of risks and benefits of action, for the following options:
• Woodland planting – strong evidence on the benefits of increased woodland cover, especially close to urban areas where it will have most value for recreation and health;
• Upland Peatland Restoration – strong evidence on the benefits of restoring peatland and managing them for carbon, water and recreational benefits;
• Wetland creation – strong evidence on the benefits of increasing the area of wetlands, particularly upstream of urban areas;
• Protecting and expanding areas of intertidal habitat – good evidence of the benefits of stopping losses and creating more habitat in order to help manage the rising costs of coastal defence;
• Improving and expanding urban greenspace – growing evidence supports the health benefits of good quality greenspace close to people’s homes;
• Improving air quality – good evidence, particularly in urban areas, of the benefits of less pollution;
• Improving the environmental performance of farming – good evidence of the benefits of agri- environment actions, but continuing case for additional interventions to reduce environmental impacts further (more analysis needed);
• Managing catchments – good evidence available on the benefits at a project level but difficult to generalise results to other places without detailed analysis to take account of specific contexts.
It is no surprise that agriculture, occupying over three quarters of Wales, makes a big impact in terms of benefits, risks and opportunities. Even when considering such an extensive land use, however, taking a ‘systems approach’ and bringing in the wider connections to society is important.
Looking at the 'food production system' gives us a more strategic vantage point to consider issues such as diffuse pollution or habitat loss. Such a perspective is essential if we are to get to the root causes of problems and design interventions which optimise the benefits. Doing this in collaboration with the people managing the land from the outset provides significant opportunities for the sustainable management of natural resource
References: Natural Capital Committee. 2015. Third Report to the Economic Affairs Committee: The state of Natural Capital: Protecting and Improving Natural Capital for Prosperity and Wellbeing.
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Extract from Future Trends Report – Chapter 5 Land Use and Natural Resources
Wales’ biodiversity and habitats will be under ever greater pressure, mirroring the global situation. Whilst there have been improvements in recent years, particularly in water quality and some elements of air quality, many of our natural resources and the resilience of Wales’ ecosystems are continuing to decline (SoNaRR 2016). It is likely that ecosystems across Wales have insufficient resilience to the challenges that they face, and this could impact on their capacity to provide services and benefits into the future.
Potential trends for animals, plants and other organisms vary enormously across species, with some species increasing and some decreasing. However, long-term combined trends for species are downwards. The decline in heavy industry has resulted in a reduction in emissions of some pollutants, such as particulate matter. Other sources of air pollution, such as transport, agriculture and domestic heating, have become more of a concern.
By 2050, average river flows in winter may rise by 10-15%. However, in the summer and early autumn they could reduce by over 50% and as much as 80% in some places. Droughts and flood events may become more common. Climate change may also affect the rates of groundwater recharge.
Soil carbon has been stable in improved land for 30 years. Recent increases in soil carbon in woodland until 2007 have now stabilised with no further increase detected. However, a significant decline in soil carbon in habitat land over the last 10 years has been detected and further work is needed to identify possible reasons for this. Soil acidity has continued to decrease in habitat land and woodland reflecting the decline in acidic deposition over the last 3 decades. However, soil acidity is increasing again in improved land perhaps reflecting low levels of lime applications needed to maintain soil conditions under intensive management. Soil nitrogen levels are stable in improved land and woodland whilst a recent observed decline in soil nitrogen in habitat land is likely to be beneficial for native vegetation. There has been good progress in waste reduction in Wales, but there is more to do.Housing need in Wales is growing due to the number of households increasing faster than the number of available properties. In contrast, there is likely to be less suitable land available for development as flood plains and other lower lying land becomes increasingly
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Waste Management
The main influence of Europe on the waste industry is on environmental and regulatory controls. The definitions of wastes, environmental permitting controls and requirement to manage waste in line with the waste hierarchy comes mainly from European legislation. A review of the literature on the impacts of Brexit on the waste industry indicates that the main issues raised are around the area of legislation and prioritisation of waste and circular economy goals in Government policy.
The majority of waste management statistics collected are around the sources of waste and the types of waste produced and proportions that are recycled. There are little data on the destinations of waste or recycled material outside of the UK.
A growing percentage of waste is imported/exported (traded) in the UK (Welsh export figures***(under research)). This will include materials going for reuse or recycling in other countries (including those outside of Europe but within the OECD) and materials exported for recovery in Energy from Waste facilities. Key European countries that are known to trade in recycled goods from Wales are France and Spain for recycled glass and the Netherlands, France and Sweden for recovery for Energy from Waste facilities. (This means black bag waste from households being shipped to these counties for incineration). Although this practice does address the issue of avoiding land fill, it is a resource leaving Wales and is contributing to other European countries recycling targets by virtue of the current EU Directive accounting methodology.
Waste is generally a low value material and its recovery or disposal can be expensive, it is often transported considerable distances to be managed at facilities offering the lowest costs, this may include crossing borders with England, Ireland and Scotland. This transportability is likely to be a driver to maintain similar controls across the UK to avoid waste tourism between the territories. This low value will also mean that exporting of waste is susceptible to changes in currency and barriers of any kind. Anecdotally, it is viewed that any barriers to export of recyclates including the black bag waste from Wales, is likely very quickly to result in stockpiles of materials. This is of particular concern with the household waste which can create a significant fire risk or health risk.
Welsh Policy aims to manage waste wherever we Wales to extract any value, to create jobs and to provide resources to Welsh industry.
Workforce
The industry relies on some migrant workers in particular at Material Recovery Facilities (MRFs) which often use European workers on ‘picking belts’. Reduced immigration could impact on waste management costs, although this could support Welsh Policy for household waste of having high quality separate collection and not using MRFs.
Waste policy is predicated on achieving a more circular economy and it is estimated that this will save the Welsh economy ca.£2bn a year in material costs. The municipal waste sector is important in Wales, which is close to having the highest municipal recycling rate in Europe. More than 4,000 people were directly employed in managing waste in Wales in 2015-16. Each of these jobs supported a further 0.6FTE. The municipal waste sector in Wales supported more than £460million of output and more than £100 million of GVA in 2015-16. Increasing recycling rates will help the move to a circular economy and has the potential to add up to 30,000 new jobs.
Waste Exports and WTO trade agreements
Currently waste can be exported for recovery under certain conditions and green list waste controls. On leaving the EU it is unclear at this time what the current tariffs apply to waste and recycled goods. However, sustainable development and protection and preservation of the environment are fundamental goals of the WTO, any de
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Current news on the WTO Environmental Goods Agreement (EGA)
Eighteen participants representing 46 WTO members are engaged in negotiations seeking to eliminate tariffs on a number of important environment-related products. These include products that can help achieve environmental and climate protection
goals, such as generating clean and renewable energy, improving energy and resource efficiency, controlling air pollution, managing waste, treating waste water, monitoring the quality of the environment, and combatting noise pollution. The participants to these negotiations account for the majority of global trade in environmental goods. The benefits of this new agreement will be extended to the entire WTO membership, meaning all WTO members will enjoy improved conditions in the markets of the participants to the EGA.
Food Waste Facts and Figures
Around 10 million tonnes of food and drink is wasted in the food chain annually. This is equivalent to around one quarter of the 41 million tonnes of food bought. Around 60 per cent of this is avoidable. The total food waste had a value of over £17 billion in 2015 and is associated with around 20 million tonnes of greenhouse gas (GHG) emissions.
By weight, household food waste made up 70 per cent of the UK post-farm-gate total, manufacturing 17 per cent, hospitality and food service 9 per cent and retail 2 per cent. Around 85 per cent (by weight) of the avoidable food waste arises in households and food manufacture.
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Levels of household food waste in the UK in 2015 were equivalent to 75.2 kg per person per year. In 2015 the average UK household with children spent £60 per month on food that could have been eaten but was thrown away.
In addition to food ending up as waste, 710,000 tonnes of food surplus from manufacturing and retail is either being redistributed via charitable and commercial routes (47,000 tonnes in 2015), or being diverted to produce animal feed (660,000 tonnes in 2015).
Notes: Avoidable waste is food and drink thrown away because it is no longer wanted or has been allowed to go past its best. The vast majority of avoidable food is composed of material that was, at some point prior to disposal, edible. Possibly avoidable waste is food that some but not all people would eat, and unavoidable waste is elements that are not suitable for consumption. Further details can be found in the glossary.
Source: Handy Facts and Figures on Waste in the UK and other associated WRAP reports: www.wrap.org.uk/content/uk-handy-waste-facts-and-figures-retail-sector, www.wrap.org.uk/content/household-food-waste-uk-2015-0 https://www.gov.uk/government/statistics/uk-waste-data
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Water Framework Directive
The process and assessment processes for delivering the Water Framework Directive are one of the main sources for evidence for the status and pressures facing Wales’ water environment. The evidence and management objectives are laid out in the River Basin Management Plans. The most recent plans, the Western Wales river Management Plan 2015-2021 and the Dee River Basin Management plan 2015 -2021 have been published and are available on the NRW website.
There is much debate regarding the usefulness of the water framework directive methodology and this will be an area for review in the future. At this time, the statutory documents supply the main sources of data. https://naturalresources.wales/evidence-and-data/research-and-reports/water-reports/river-basin-management- plans-published/?lang=en
A sufficient quantity of good quality water is essential for living organisms and to support Wales’ diverse wildlife. People and the economy also derive substantial benefit from Wales’ natural water resources. New sustainable and joined-up solutions must be found to the current and future threats to the water environment. The Environment (Wales) Act will help us focus on a more collaborative and integrated approach to natural resource management, looking at the root causes of problems and working with stakeholders to find long-term solutions. The distribution of these issues will differ across Wales and the priorities and opportunities to design and implement appropriate solutions will need to be reflected within Areas Statements.
River Basin Management Planning works on a six yearly cycle and we are currently at the start of the second cycle which runs to 2021.The baseline for Wales at the start of the second cycle of the water framework directive process is that 37% of water bodies meet good or better overall status. Objectives were set to meet good or better status in 79% of water bodies by 2021. The focus for the 2nd cycle was proposed in a NRW Board paper (NRW B B 44.15) on preventing deterioration, targeting an additional 5% of water bodies to meet good status in 42% of water bodies by 2021 and developing an approach using natural resource management to meet these challenges whilst optimising social and economic outcomes.
Assessment - WFD Key Pressures
For each failing water body NRW record the reason for not achieving good status. A water body can have more than one reason and they tend to fall into key themes. The main themes are shown in Figure 1 and are discussed below.
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Figure 1: Main reasons for not achieving good status in Wales.
Physical modifications – These can cause changes to the natural flow, water levels and impact on available habitat. For example;
• There are many thousands of barriers in our rivers, mostly a legacy of the industrial revolution and also of old milling operations. Together with NRW partners, they have amended hundreds of barriers to restore fish migration potential. The Salmon for Tomorrow programme alone delivered 62 fish migration improvements projects improving fish access to over 700km of rivers.
• NRW are working with Dŵr Cymru/Welsh Water (DCWW) to identify feasible mitigation measures, e.g. where alterations to water releases from a reservoir or, where it is cost effective, installing eel passes.
Pollution from minewaters – Abandoned Metal Mines which cause metal pollution are the reason for not achieving good in 67 Welsh water bodies which cover a total of over 700km of rivers. They are responsible for 8% of our rivers currently failing to meet their required quality objectives.
Pollution from rural areas - The impacts of poor land management can result in nutrients, pesticides and sediments affecting the water environment. NRW wants to see an effective and efficient approach to integrated land and nutrient management across the whole of Wales. This will help to reduce many of the environmental pressures currently associated with agricultural and forestry production. These issues have already been highlighted in NRW’s responses to the WG consultation on the Strategic Framework for Agriculture and the Water Strategy. NRW have submitted their recommendations to Welsh Government where evidence supports that areas should be designated as Nitrate Vulnerable Zones (NVZ) within Wales. Designation of Nitrate Vulnerable Zones is considered a basic measure under WFD and will help deliver its objectives. https://consultations.gov.wales/sites/default/files/consultation_doc_files/160929-nvz-recommendations-for-wg-final- en.pdf
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Pollution in urban areas – Our towns and cities are experiencing increasing rates of soil sealing as we build on green spaces. As a consequence the drainage systems built to take rainfall away are often overloaded and can be discharged to surface waters causing pollution. Tackling this is complex due to the nature and number of small discharges that collectively have a locally significant impact. This has been recognised by the WG Water Strategy and NRW’s Diffuse Pollution Plan, both of which are included in the Programme of Measures in the RBMPs.
Pollution from waste water – Nutrients and pollutants from sewage and waste water can have a detrimental effect on the water environment. As part of Ofwat’s periodic review of prices, we issue a National Environment Programme (NEP) to water companies which sets out the obligations to comply with environmental legislation, which must be delivered as part of their Asset Management Plans (AMP). We are currently in the AMP6 period (2015–2020). The DCWW investment programme for this period includes funding of £41.5m to achieve good ecological status under WFD.
Flow – The existing abstraction licensing system is no longer able to meet the challenges posed by climate change and future population growth. In addition some water abstractions which can pose a significant risk to water status are currently exempt from requiring a licence. Hence WG and NRW are working on delivering two important pieces of work:
New Authorisations to bring those exempt abstractions under control (e.g. trickle irrigation, abstractions within exempt geographical areas etc.). Based on current estimates we expect to licence at least 270 currently exempt abstractions within Wales.
Abstraction Reform – WG have set out how the water abstraction management system will change in future. We expect the new system, which will be delivered through the Environmental Permitting Regulations, to commence in early 2020s.
Invasive Non-Native Species (INNS) – the spread of INNS in watercourses across Wales poses a threat to biodiversity, increases flood risk and has a significant economic impact through the costs of preventing further spread. Climate change could increase the frequency and variety of INNS in the future affecting the condition of water bodies.
For more detailed evidence on the relationship between land management and water pollution issues there are multiple site specific reports. A key source of evidence for Wales is the EEP – Ecobank project. In their feasibility study the project, based on WFD investigations concluded that 95% of the Dissolved Inorganic Nitrogen (DIN) is likely to be attributed to agriculture and land management sources. http://www.eepecobank.co.uk/reports/land-manager-assessments-credits/
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Access to Research and Development Resources
This is a factor that cuts across all the sectors in the portfolio, and does not neatly fit within the “four freedoms” of the Single Market. All views of future success express a need for our sectors to be at the forefront of their specialisms, in order to have a competitive edge. In the past we have benefitted from funding and knowledge exchange mechanisms through the EU that have facilitated this. In the absence of such mechanisms we will need to provide for some form of alternatives. This may involve some access to EU knowledge exchange mechanisms (some countries buy access to learning programmes).
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Annex 1
Introduction – Stakeholder Engagement Summary
In July 2016, following the UK’s vote to leave the European Union, stakeholders connected to the Environment and Rural Affairs (ERA) portfolio met for a round table meeting at the Royal Welsh Show. At this discussion, it was agreed that workshops should be held to look in more detail at the implications of Brexit – in particular the key risks, opportunities, and impact on the way forward – for the ERA portfolio.
A total of five independently-facilitated, full-day stakeholder coproduction workshops were held between the end of August and early October 2016. The meetings were attended by more than one hundred invited stakeholders from organisations with an interest in the impact of Brexit on the ERA portfolio.
Each of the workshops focused on a different stage of the supply chain:
Workshop 1: Primary Production, Land Use and Sea Management Workshop 2: Markets and Supply Chains Workshop 3: Consumers and Services Workshop 4: Resource Efficiency and Waste Minimisation
The workshops were designed to be iterative, and at each stage outputs of the previous sessions were presented to encourage the development of ideas and minimise repetition.
Overview of Results
Although each workshop brought up discrete issues, generally relating to the stage of the supply chain being considered, there was a degree of commonality in terms of the headlines and these are summarised below. All issues raised have been compiled into opportunities and risks, along with some sectoral specifics. It should be noted that we have not attempted to interpret the results, but present them as discussed at the events.
Opportunities and Risks
Opportunities
1. Stakeholders identified a clear opportunity for cross-sector collaboration to maximise the impact of Wales and the ERA sectors to ‘find a new way forward for Wales’.
2. Stakeholders saw Brexit as an opportunity for Wales to do something different. It offers a chance to develop legislation and standards that are more suited to the needs and aspirations of Wales, rather than a compromise solution drawn from the needs of 28 nations. Our existing legislation in terms of the WFGA and EA can provide a strong framework for policy development. There is scope to better link policy across different sectors, e.g. education, health and land use, and to develop legislation that enables, as well as protects.
3. This is a good time to develop a strong brand (in terms of a value set, not a logo) and Unique Selling Point (USP) for Wales, based around high quality products and services produced in a sustainable way. To achieve this it was agreed that a whole supply-chain approach was necessary to maximise value.
4. The ability to build on the importance of agriculture to the wider rural economy, including in areas like tourism and renewable energy and deliver social benefits in areas like health and better connect people with the environment.
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5. There is scope to develop greater resilience through investment in processing, adding value and shortening supply chains, all of which are currently lacking in several sectors. In the timber and forestry sector there was an identified need to secure sites for planting in order to ensure future resilience.
6. Investment in innovation could be used to replace low-skilled jobs and mitigate the impact of less-favourable access to the European labour market.
7. Brexit presents the opportunity for a fresh start in terms of our approach to farming and for support mechanisms, for example reshaping CAP for greater public benefit and to tackle headline challenges like the decline in biodiversity2, or refocusing environmental support to include forestry. There were caveats around the need for transitional support to soften the impact of change.
8. Wales needs to ensure that the value of natural resources is taken account of in negotiations, along with our leadership in resource management, as demonstrated in our progress towards zero waste and carbon neutrality. The value of our water resources was seen as especially important, as was our wider marine environment (for energy, tourism, food and raw materials) and the potential to benefit from environmental goods and services.
9. There may be an opportunity to develop the domestic market and increase consumer choice through certification schemes that promote local produce, and promote Wales as a sustainable source of food.
10. The SoNaRR report was published after these workshops but subsequent discussion at the Roundtable highlighted the opportunity to use SoNaRR to inform the key actions that need to be taken.
Risks
1. One of the greatest risks is that Wales will not have a place at the table and so its interests will not be adequately represented in negotiations. Our lack of leverage with UK government might risk our ability to ensure that agriculture and food are high priorities and ensure the best outcomes for Wales.
2. The loss of access to the single market, for both sales of products (especially meat and fish) and supply of raw materials. There were concerns over continued access to markets post-Brexit in light of the presence of bovine TB in Welsh cattle. Our overall identity and PFN / PGI products are seen as a great strength and guarding Protected Food Names was especially key for the markets and supply chain. Loss of access to the single market could be mitigated to some extent by developing our domestic market in the UK.
3. It was felt that there was a risk to the labour supply arising from a devalued pound (in the short term) and loss of free movement (in the medium to long term). The loss of key workers from the EU was also a concern, including in critical occupations such as vets working in abattoirs. Access to collaborative research is also at risk.
4. There is a risk to environmental and legislative safeguards from breaking links to the EU and also the risk that UK Government might not take key devolved legislation such as WFGA / EA seriously enough to respect its implications. Environmental legislation safeguards both our natural environment and human health and risks include the degradation of the landscape and quality of water (due to loss of protective legislation) and a decline in biosecurity (due to loss of Invasive Non-Native Species (INNS) regulation.
5. A risk of higher food prices was identified, as was exposure to cheaper goods from outside of the EU. There was, however, scope to adjust tariffs to protect sensitive products, and for better border management to control pests and diseases.
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6. There is a risk to funding and support – with a need to maintain funding, albeit within the context of a greater focus on environmental outcomes and moves towards self-sufficiency. The timescale for negotiation and an associated period of prolonged uncertainty could be very damaging to Welsh business.
Key Ask for Brexit Process
1. The Welsh “voice” needs to be heard throughout this process.
2. Welsh businesses need unfettered access to the EU Single Market (tariff and non-tariff-barrier free).
3. Policy and Regulation needs to fit Wales’ distinct context and priorities, which also support the drive for high standards.
4. To support investment in processing and market development in some sectors to help build resilience, and give consideration to future arrangements concerning non-devolved R&D funding.
5. To maintain appropriate levels of access to skilled, semi-skilled and unskilled labour
6. Support for transitional arrangements and consideration in the meantime on how to focus remaining EU investment funding to enhance competitiveness of Welsh businesses
7. Assurance over long term financial commitments (beyond 2019) as a consequence of loss of access to expected European funding.
8. Trade options that adequately reflect and account for our risks, vulnerabilities, potential and opportunities in Wales.
Annexe 1a
Issues by Sector
Primary Agriculture
Access to markets is the key factor for the sector – alternative markets such as Australia or New Zealand do not offer anything of consequence for Welsh primary produce. It was recognised that Brexit offers an opportunity for a redesign of the farming sector and current approaches to subsidies. There are opportunities for increased diversification in the sector around renewable energy and the use of water and other natural resources. A stronger brand for Wales would be of benefit in selling high quality Welsh produce across all markets. There is a need to factor in transitional support to mitigate the effects of both a possible hard exit and loss of markets in the short term and to replace existing subsidies and support for production that will be lost. A significant risk for the sector is that of hardened attitudes amongst current export target markets towards Bovine TB in the food chain in the UK.
Timber and Forestry
In the timber and forestry sector, there is considerable scope for exploiting the domestic market to a greater extent; displacing imports from Scandinavia and the Baltic nations. Forestry currently sits outside many of the environmental support mechanisms in primary production. There is the potential to realise environmental benefits by addressing this.
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The sector needs investment to ensure that Wales enjoys a sustainable and resilient timber resource for the future. As with other areas of primary production, there is significant scope for increasing the added value not currently derived in Wales at present.
Fisheries and Marine Management
This sector has subsequently been the focus of a more detailed sectoral workshop, run within the framework of the WMSAG.
Access to EU markets is critical to the fisheries industry – given our reliance on sales of live shellfish – and this needs to be protected. Wales lacks either wholesaling or processing capacity in fisheries and this needs to be addressed in order to build resilience in the sector and boost supply chain activity. One example is the lack of a wholesale fish auction in Wales at present. The complexity of fishing quotas and ownership of fishing rights risks a prolonged period of uncertainty in the sector, which might impact on willingness to invest. Wales needs to value its headline assets in the marine sector, including access to the sea (and world class tidal ranges), seabed and beaches. These should be considered in the context of energy, tourism, food, aggregates and well-being.
Natural Resources
The natural resources of Wales were considered central to the development of a ‘Brand Wales’ that would appeal to, and encourage, ‘green’ and ethical consumer choices. Recognised standards and regulations, alongside the Welsh coast and countryside were considered central to developing Welsh tourism and a way in which to break into emerging markets for Welsh agricultural exports. Regardless of the relationship the UK has with the EU after leaving, there was a consensus in support for maintaining and improving upon European environmental standards and regulations. It was considered important to avoid a ‘race to the bottom’ and deregulation for short-term gains during periods of economic instability. Welsh environmental legislation, such as that concerning waste management, could be better tailored to meet Wales’ needs, rather than top-level EU policy that has to compromise to the demands of 28 member states. The importance of land-management was central to discussions about the Welsh ERA’s ‘offer’, because of its economic and environmental value to the rest of the UK. Welsh peatlands, for example, could be promoted as a carbon storage solution. The development of Wales’ renewable energy capacity was considered an opportunity post-Brexit.
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Annex A The contribution of subsidies to Farm Business Income and Output
This brief note looks at the relative contribution of agricultural subsidies to Farm Business Income and Output. Figures are shown by farm type and the distribution of farms is also considered (in terms of how reliant are farm businesses on agricultural subsidies).
Data source
The Farm Business Survey (FBS) in Wales is an annual survey of farm businesses which collects detailed physical and financial information from approximately 550 farms across Wales and covers all types of Welsh livestock farm. The sample for the survey is predominantly drawn from those farm businesses in Wales with a standard output4 of at least €25,000. The results reported here will not therefore be representative of very small and part-time holdings.
Components of Farm Business Income and Output
Table 1 shows how the different components of income (including subsidies) add up to total Farm Business Income. This data is also shown by farm type and year. Table 2 is identical, except it looks at the components of Farm Business Output rather than income.
4 The standard output is the average monetary value of the agricultural output of crop or livestock products at farm-gate prices (in € per hectare or € per head of livestock). The economic size of a farm business is the sum of all standard outputs (Eurostat). 83 | P a g e
Table 1: Farm Business Income per farm, by component of income, farm type and year
£ per farm Dairy Cattle & sheep (LFA) Cattle & sheep (low land) All farm types 2012-13 2013-14 2014-15 2012-13 2013-14 2014-15 2012-13 2013-14 2014-15 2012-13 2013-14 2014-15 Farm Business Income (including diversification) 45,100 77,000 70,200 21,600 19,200 23,300 27,200 28,600 27,800 26,600 29,300 29,400 Of w hich: 1. Income from agriculture (excluding subsidies) 18,200 50,400 47,100 -6,400 -10,300 -6,000 6,500 5,000 8,000 -200 1,500 2,800 2. Income from Single Farm Payment 20,300 21,300 18,500 21,500 22,900 20,300 17,900 19,100 15,700 20,700 21,800 19,000 3. Income from agri-environment w ork 1,600 1,400 1,300 4,800 5,100 6,000 1,800 1,900 1,200 3,800 3,900 4,400 4. Income from diversified enterprises 1,000 1,200 1,200 1,200 1,300 2,900 800 2,400 2,000 1,400 1,500 2,700 5. Subsidies and payments to agriculture (a) 4,000 2,800 2,100 400 200 200 100 200 900 900 600 600
Total subsidies (2 + 3 + 5) 25,800 25,400 21,900 26,700 28,200 26,400 19,800 21,100 17,900 25,300 26,300 24,000 Subsidies as a share of Farm Business Income 57% 33% 31% 124% 147% 113% 73% 74% 64% 95% 90% 81%
(a) Excludes agri-environment payments.
Headline messages from Table 1:
The Single Farm Payment makes up around 80 per cent of all subsidies (the majority) for all farm types – calculation not shown in the table above.
Over the three years shown in the tables, the subsidies data are relatively stable (although we wouldn’t expect to see this over a longer run of years).
Cattle & sheep (LFA) farms are reliant on subsidies for more than 100% of their farm business income in each of the past three years (i.e. a loss was made if subsidies are not included in income).
Dairy farms only rely on subsidies for around a third of their farm business income in the past two years (31 per cent in 2014-15).
Cattle & sheep (lowland) farms rely on subsidies for around two-thirds of their business income (64 per cent in 2014-15).
Across all farm types, subsidies accounted for 81 per cent of farm business income in 2014-15.
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Table 2: Farm Business Output per farm, by component of output, farm type and year
£ per farm Dairy Cattle & sheep (LFA) Cattle & sheep (low land) All farm types 2012-13 2013-14 2014-15 2012-13 2013-14 2014-15 2012-13 2013-14 2014-15 2012-13 2013-14 2014-15 Farm Business Output (including diversification) 305,300 362,900 376,000 107,300 113,900 121,100 111,200 118,000 118,700 142,400 156,000 159,100 Of w hich: 1. Output from agriculture (excluding subsidies) 274,100 332,100 348,200 73,700 78,000 85,000 86,200 88,900 93,400 110,300 122,200 126,200 2. Single Farm Payment 23,500 24,200 21,700 25,400 27,200 24,100 21,000 22,300 19,000 24,300 25,600 22,700 3. Agri-environment payments 1,800 1,600 1,700 6,000 6,300 7,300 2,200 2,200 1,700 4,700 4,800 5,400 4. Output from diversified enterprises 1,900 2,300 2,400 1,800 2,100 4,400 1,700 4,400 3,800 2,200 2,700 4,300 5. Subsidies and payments to agriculture (a) 4,000 2,800 2,100 400 200 200 100 200 900 900 600 600
Total subsidies (2 + 3 + 5) 29,300 28,500 25,500 31,800 33,700 31,600 23,400 24,700 21,600 29,900 31,000 28,600 Subsidies as a share of Farm Business Income 10% 8% 7% 30% 30% 26% 21% 21% 18% 21% 20% 18%
(a) Excludes agri-environment payments.
Headline messages from Table 2:
In 2014-15, subsidies accounted for only 7 per cent of farm business output for dairy farms, while the corresponding figure for cattle & sheep (LFA) farms was 26 per cent.
Cattle & sheep (lowland) farms were reliant on subsidies for 18 per cent of their farm business output in 2014-15.
Averaged across all farm types, subsidies accounted for 18 per cent of farm business output in 2014-15.
.
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Subsidies make a much larger relative contribution to farm business income, given that in essence farm business income is the same as Net Profit. Further details on the derivation of farm business income are provided in Annex A.
The importance of whether a farm makes a loss is dependent on whether agriculture is the only or main source of income. If there are other income streams for the household, then these could be subsidising the agricultural component of income, but the Farm Business Survey does not give us this information.
Reliance on subsidies: distribution across farms
Charts 1 and 2 below show the distribution of the single farm payment for 2014-15 as a share of both farm business income and farm business output. For both of these charts the data is based on the full sample of annual FBS record, i.e. sample = 550 farm businesses, with no weighting applied.
Chart 1: Total subsidies as a share of Farm Business Income – distribution of farms in the sample, 2014-15
25%
20%
15%
10%
5%
0% 0 to <25 25 to <50 50 to <75 75 to <100 100 to <200 200 per cent Negative farm per cent per cent per cent per cent per cent or more business income
Chart 2: Total subsidies as a share of Farm Business Output – distribution of farms in the sample, 2014-15
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35% 30% 25% 20% 15% 10% 5% 0% Less than 10 10 to <20 20 to <30 30 to <40 40 per cent per cent per cent per cent per cent or more
Chart 1 in particular suggests the extent of reliance of farm businesses on subsidies, with only 11 percent of farm businesses in the sample having less than 25 percent of their farm business income derived from subsidies. For around a third (32 per cent) per cent of farm businesses in Wales in 2014-15, subsidies provided at least 100 percent of farm business income.
Further work could be done to look at these distributions by farm type or by other key variables.
Annex A: Derivation of Farm Business Income
Total crop enterprise output (including home grown fodder crops for sale) and output from tillages + Adjustment for disposal of previous crops + Total livestock enterprise output + Output from inseparable and separable non-agricultural diversification + Single farm payment + Agri-environment payments + Other grants & subsidies
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+ Miscellaneous revenue = Total farm output (farm business output) - Variable costs = Total farm gross margin - Fixed costs + Profit (loss) on sale of assets = Farm business income
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Annex B Pillars 1 and 2 settlements for the 2014 – 2020 period.
All figures in € and in current prices Prior to Pillar transfers After Pillar transfers Pillar 1 Pillar 2 Combined Pillar 1 Pillar 2 Combined Calendar Financial United Calendar Financial Year1 Year Kingdom Year1 Year United Kingdom 2013 2014 3,650,000,000 371,473,873 4,021,473,873 2013 2014 3,353,700,000 667,773,873 4,021,473,873 2014 2015 3,548,576,000 370,520,030 3,919,096,030 2014 2015 3,166,774,240 752,321,790 3,919,096,030 2015 2016 3,555,915,000 369,548,156 3,925,463,156 2015 2016 3,173,323,615 752,139,541 3,925,463,156 2016 2017 3,563,262,000 368,557,938 3,931,819,938 2016 2017 3,179,880,130 751,939,808 3,931,819,938 2017 2018 3,570,477,000 367,544,511 3,938,021,511 2017 2018 3,186,318,847 751,702,664 3,938,021,511 2018 2019 3,581,080,000 366,577,113 3,947,657,113 2018 2019 3,195,781,039 751,876,074 3,947,657,113 2019 2020 3,591,683,000 365,935,870 3,957,618,870 2019 2020 3,205,243,231 752,375,639 3,957,618,870 2014-2019 2015-2020 25,060,993,000 2,580,157,491 27,641,150,491 2014-2019 2015-2020 22,461,021,101 5,180,129,390 27,641,150,491 -2,599,971,899 2,599,971,899 0
Calendar Financial Calendar Financial Year1 Year Wales Year1 Year Wales 2013 2014 326,900,000 51,111,090 378,011,090 2013 2014 318,500,000 59,511,090 378,011,090 2014 2015 317,810,467 50,979,851 368,790,318 2014 2015 270,138,897 98,651,421 368,790,318 2015 2016 318,467,747 50,846,131 369,313,878 2015 2016 270,697,585 98,616,293 369,313,878 2016 2017 319,125,745 50,709,887 369,835,632 2016 2017 271,256,883 98,578,749 369,835,632 2017 2018 319,771,920 50,570,449 370,342,369 2017 2018 271,806,132 98,536,237 370,342,369 2018 2019 320,721,525 50,437,345 371,158,870 2018 2019 272,613,296 98,545,574 371,158,870 2019 2020 321,671,129 50,349,116 372,020,245 2019 2020 273,420,460 98,599,785 372,020,245 2014-2019 2015-2020 2,244,468,533 355,003,869 2,599,472,402 2014-2019 2015-2020 1,948,433,253 651,039,149 2,599,472,402 -296,035,280 296,035,280 0
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Annex C Comparative levels of subsidy for agriculture
Source: Institute of Economic Affairs, Cutting the Gordian Knot (2014)
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Annex D Trend of UK farmland values, 1940 – 2015
The following is an extract from the Worshipful Company of Farmers’ report, Agricultural Implications of Brexit, February 2016, Professor Allan Buckwell.
Qualitative support for the suggestion of land values capturing the payment is illustrated in the attached post-war time series of land prices shown in £/acre, in Figure 7. This chart clearly shows the spike in both current and deflated (real) land prices in 1973 as the UK joined the EEC. It shows another jump in the mid-1990s as the MacSharry reform converted price supports into (generously calculated) direct arable area and livestock headage payments. It shows a further upturn in 2004 when the Fischler reform consolidated the previous direct payments into the largely decoupled single farm payment.
Figure 7 Post WWII farmland prices in the UK, current and real £/acre
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Annex E Allocation of RDP across schemes and sectors, 2014 – 2020
Current Food and Allocations supply Communit
Proposed RDP 2014 -2020 Schemes £ Farming chain Forestry y % of RDP of%RDP Human And Social Capital Measures
37,999,99 4,000,00 Knowledge Transfer and Innovation 49,999,999 5 9 8,000,000 0
Rural Business Advisory Services 13,065,474 1 9,565,474 3,500,000
Cooperation and Supply Chain 70,000,00 <= part 70,000,000 7 Development part of => 0 of
European Innovation Partnership 1,800,000 0 1,800,000
134,865,47 49,365,47 81,500,00 4,000,00 Subtotal 14 0 3 3 0 0
Investment Measures
39,998,37 Processing and marketing grant 39,998,373 4 3
67,700,00 Sustainable Production Grant 67,700,000 7 0
10,500,00 Young and new entrants support 10,500,000 1 0
Business creation and development of part of 15,000,001 2 non-agri activity part of => part of => => 15,000,001
6,235,74 F&F infrastructure; risk mgt 6,235,749 1 9
8,000,00 Timber Business Investment 8,000,000 1 0
147,434,12 78,200,00 39,998,37 14,235,7 Subtotal 15 15,000,001 3 0 3 49
Agri Environment - Climate Measures
97,543,50 Glastir Entry 97,543,500 10 0
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20,000,00 Glastir Habitat Networks 20,000,000 2 0
33,000,00 Glastir Small Grant Scheme 33,000,000 3 0
252,966,77 252,966,7 Glastir Advanced 26 6 76
29,500,00 Glastir Commons 29,500,001 3 1
43,999,99 Glastir Organics 43,999,999 5 9
19,150,0 Glastir Woodlands - Creation 19,150,000 2 00
Glastir Woodlands - Forest 4,799,99 4,799,999 1 Management Plans 9
Glastir Woodlands - Management 20,858,1 20,858,103 2 (Environment) 03
Glastir agroforestry 850,000 0 850,000
Glastir Small Grants - Small Woodlands 350,000 0 or Starter Woodlands part of => 350,000
Glastir Woodlands - Management 1,885,50 1,885,500 0 (Economy) 0
4,960,00 Glastir Woodlands - Restoration 4,960,001 1 1
Glastir Woodlands - Area Payments 300,000 0 300,000
530,163,87 477,010,2 53,153,6 Subtotal 55 0 0 9 76 03
Local Development measures
LEADER 47,666,126 5 47,666,126
Rural Community Development Fund 59,199,351 6 59,199,351
106,865,47 106,865, Subtotal 11 0 0 0 7 477
Technical Assistance 38,132,898 4
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957,461,85 10 604,575,7 121,498,3 71,389,3 121,865,47 Total RDP 0 0 49 73 52 8
66% 13% 8% 13% excl TA
63% 13% 7% 13% of RDP
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EVIDENCE AND SCENARIOS – EVIDENCE PACK
Annex F Agricultural co-operatives in the EU
There are large differences between Member States. Cooperatives have a high market share in countries like Denmark and Finland, but much lower in countries like Estonia or Spain. The bar chart shows the data for each of the Member States. For UK, Romania, Bulgaria, Luxembourg and Cyprus data are sketchy or not available. The average market share of all agricultural cooperatives in the EU is 40%”. [2012 report for EC]
Within the UK, data on cooperatives in the agrifood industry are scarce and outdated, but suggest considerable market share (in terms of farms’ produce handled) in fruit & vegetables, milk, and to a lesser extent in pig meat and cereals. In cases like milk, this situation is the result of the fact that the abolished marketing boards turned into cooperatives. The sugar sector is run by an IOF, but the National Farm Union acts as a bargaining association. The devolution of powers and authority in different degrees to Wales, Northern Ireland and Scotland, as well as delivery of much economic policy via the Regional Development Agencies within England created differences in the support for agricultural cooperatives.
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Market share of cooperatives, per sector and total EU, 2010
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Annex G Relative scale of fisheries to states
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Annex H World Organisation for Animal Health (OIE)
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Broadband and Connectivity Across Wales
Infrastructure in terms of connectivity and access to broadband is vital to support innovation, research and the development of SME’s across Wales, not just in the more sparsely populated areas.
OfCom’s review of the nation’s connectivity in 2016 has the following results
The state of fixed broadband in the UK
Superfast coverage has improved, though SMEs still see poorer availability than residential consumers. This is because many are located in areas that are less well served. A significant number of homes and businesses are still at risk of digital exclusion.
In terms of mobile coverage there is again a mixed picture. Indoor coverage has increased to approx. 89% of UK premises but geographic coverage is still under 70% of the UK landmass.
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Key Documents
EU Referendum – Headline messages & Early Assessment SECTORAL IMPACTS OF UK DEPARTURE FROM THE EU - AGRICULTURE, FOOD AND DRINK Market Access needs in the ERA portfolio – September 2016 Directorate for Agriculture, Farming and Marine - Potential post referendum considerations
i Source: Mercosur ii Source: Europa Agriculture and Rural Development
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