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The Workhouse Festival at Llanfyllin in Mid Wales - established to raise funds to renovate the local Victorian workhouse - has been cancelled this year, as organisers deal with debts of £15,000 and assess how to survive in the future.

It is typical of some of the smaller, community-run festivals in Wales which are struggling to survive in the face of ever tougher licence requirements and increasing competition from larger, more commercial, events.

Mark Burnett, one of the directors, tells tonight's programme, "We've seen over the past couple of years not only a huge increase in the number of small events, but following that a huge increase in the number of failures of events."

"The factors that contribute to that are far and wide, ranging from the weather conditions to restrictions that have been put on events, and conditions that have been put on licences that are administered."

"There's no real distinction in licensing between a commercial and non-commercial enterprise."

Meanwhile the Celtic Blue Rock Festival near Llanfyrnach in Pembrokeshire is appealing against the revocation of its licence after concerns were raised by Pembrokeshire County Council and Dyfed Powys Police.

Organisers say the cost of meeting licence requirements such as fencing, trackways and security personnel for the event has risen from £21,000 in 2004 to £170,000 last year.

Leisure and tourism consultant Terry Stevens says that he believes there will be "fewer and better" festivals into the future.

"There will inevitably be casualties as a result of poor management, poor promotion, the economic situation, not reading the markets right," he says.

"If we're clever in Wales and we find the right brand, the right venues and the proper promotional partnerships to make it happen, there's still a place for Wales to capture a bit of that festival market with a unique, different approach."

"But in being optimistic, I actually shed no tears for some of the lesser events...going by the wayside."

However Peter Florence, director of the Guardian Hay Festival and more recently Brecon Jazz, argues that smaller, often voluntarily-run events like the Workhouse Festival don't have the same aims as larger, more commercial festivals.

"Why are we listening to tourism people telling us about this anyway? These aren't run for tourism purposes," he tells the programme.

"Festivals are run for people and communities to celebrate, that's what they are. If there is a tourism component and people come and join you then that's fantastic...but that's not why you do festivals."

"In the same way that they might not be able to afford the Manic Street Preachers to come and play in, say, Criccieth, you might find there are things they can do which suit their own scale."

The Wales Assembly Government's new 10-year major events strategy, currently out for consultation, pledges support for arts, music, cultural and sporting events which have the capacity to grow and increase Wales' reputation as a destination.

The strategy aims to capitalise on events like the Ryder Cup in Newport later this year. But questions are being asked about how inclusive it will be.

Heritage minister Alun Ffred Jones says, "We're certainly looking for the big ticket numbers, and that has to do both with economic impact and to promote the image of Wales."

"But we're also interested in more locally-focused festivals which may not have an international impact in terms of image, but which may certainly support and stimulate the local economies."