The Welsh Government has published the full evidence base underpinning its new Sustainable Farming Scheme (SFS), amid concerns from farming unions about potential economic impacts on Welsh farms.

Deputy First Minister Huw Irranca-Davies has released the Business Case, Integrated Impact Assessment, and updated economic analysis, outlining the potential economic, environmental, and social outcomes of the scheme. He said the SFS, due to be implemented in 2026, is designed to deliver better outcomes and value for money than the current Basic Payment Scheme.

"We have invested a considerable amount of time working in partnership to design a Scheme which is accessible to all, provides choice, enables farmers to make more of their own management decisions to deliver the outcomes we all seek, as well as recognises the positive actions already taken on farms across Wales,” Mr Irranca-Davies said.

The government has committed up to £238 million to the Universal Payment, with at least £102 million supporting the Optional and Collaborative Layers.

The economic modelling forecasts potential reductions in farm business income, livestock numbers, and labour, though the Welsh Government says the figures may overestimate the effects, as they do not include longer-term benefits such as reduced costs, improved productivity, or existing compliance practices.

However, NFU Cymru and the Farmers’ Union of Wales (FUW) have raised concerns about the projected impacts. NFU Cymru President Aled Jones warned that even with revised modelling, the potential reductions in income, jobs, and production remain “extremely concerning.” He urged the government to act on the evidence to protect rural communities and the Welsh food and drink industry.

“We have always maintained that the SFS should provide at least the same level of economic stability to Welsh farming, the supply chain and our rural communities as the Basic Payment Scheme (BPS) does currently," said Mr Jones. He called for the universal and social value layers to remain central to the scheme and for the next Welsh Government to commit to increasing the budget to at least £500 million to account for inflation and meet policy ambitions.

FUW President Ian Rickman also highlighted the potential challenges, noting that although the new analysis shows a reduction in negative impacts compared with earlier modelling, concerns remain over the effect on family farms

"Welsh farmers should not be disadvantaged for transitioning to a new system of support that places greater societal and environmental demands on their businesses," said Mr Rickman.

"This is why we are calling on the next Welsh Government to increase the base-level funding of £238 million for the Universal Layer of the Sustainable Farming Scheme by an amount that fully mitigates the estimated economic impacts shown by the impact assessments and matches the policy ambitions of the Welsh Government.

“Based on the Welsh Government’s own assessments, this represents an increase of at least £76 million."

Both unions stressed the need for advisory support as the SFS is introduced. The Welsh Government has published a “ready reckoner” and will hold roadshows across Wales to guide farmers on payments and the scheme’s impact.