What to gain from stacking SFI options

Last week saw the publication of new analysis from the Agriculture and Horticulture Development Board (AHDB) on the latest Sustainable Farming Incentive (SFI) expanded offer. This follows the organisation’s evaluation of the SFI 23 offer from last year but builds in the array of new payment actions in the expanded offer.

The analysis has been carried out on four of ADHB’s hypothetical model farms, rather than real-life farms, and includes one arable, one dairy and two beef and sheep farms in opposite ends of the country. Analysis of AHDB’s arable upland farm is expected to be added later in the year.

Though the analysis is not applied to real farms, the exercise is extremely useful in mapping out some of the SFI payment options and seeing the impact of various combinations of options and their influence on farming profitability over a three-year period.

For the study, each of the three farms have two SFI approaches applied to it – an ‘SFI lite’ approach with a limited number of actions selected, and an ‘SFI ambitious’ application with a greater number of actions. The impact on farm income and profitability of the two approaches on each farm is then considered.

The key takeaway from the modelling work is that farmers should look to take part in the SFI scheme if they have not already and those that have should consider the new payment actions. Appropriate actions need to be carefully selected but have the potential to increase profitability on all four farms under both scenarios.

As in previous years, SFI payments are unlikely to completely mitigate the drops in the Basic Payment Scheme but go some way in making up the shortfall. There are more attractive choices for arable, compared to grassland farmers in terms of the number of stackable actions and their associated payments, but more payments are flowing to both compared to the SFI 23 offer.

With 102 actions and 15 more due to be added later in 2024, the list of SFI actions looks lengthy, but bear in mind that this includes the 23 already included in SFI 23 and over 50 simplified Countryside Stewardship (CS) actions. We expect the entirely new actions that can be stacked and combined with farming to attract particular interest, including the actions below:

• CIPM3: Companion crop on arable and horticultural land. £55/ha
• CIPM4: No use of insecticide on arable crops and permanent crops. £45/ha
• SOH1: No till farming. £73/ha

The modelling also dispels one of the unhelpful myths surrounding the scheme - namely that it disincentivises farming in favour of well-paying, non-food producing actions. The £853/ha payment for winter bird food on arable and horticultural land (CAHL2) has attracted particular attention. This is one of 10 ‘limited area’ actions which now has an area cap of no more than 25% of the eligible farm area.

AHDB’s analysis shows that on low yielding, unproductive areas, this action may be an attractive alternative to growing crops. However, on high yielding, productive farmland it is likely to be far preferable to continue growing crops as well as stacking the range of compatible arable actions.

Of course, many farmers will already be participating in existing schemes including CS, Higher Level Stewardship (HLS) and the SFI 2023. AHDBs modelling work does factor this in, though member’s individual farms will be different, with their own agreements and possible combinations of options.

We know there are around 24,000 SFI 23 agreements and 40,000 CS and HLS agreements across England. CLA analysis suggests that these agreements cover around 86% of eligible farmland in England. Therefore, the challenge for many will be working out if and how to combine the new actions with existing agreements.

It is fair to say that Defra and the Rural Payments Agency are at an early stage in testing how to combine the SFI expanded offer with existing schemes. This process is being trialled by those that volunteered to participate in the early roll out of the SFI expanded offer, which began last month. Those interested in joining the testing can register their interest here and are have the potential to be one of the first to join (and receive payment for) the scheme.

As always, the CLA land use team is eager to hear from members on their experiences of engaging with the SFI and other schemes and continue to share member issues with Defra and the RPA to improve systems for land managers.