Our end of year survey found that 68% of fieldmargin farmers are prioritising farm profitability in 2024, as well as reducing input costs and increasing farm sustainability. Spring 2024 for the UK has been one of the wettest on record, with many farmers well behind where they would usually be at this time of year, some have struggled to even get a crop in the ground, meaning the need to find new revenue streams is more pressing than ever.
Our webinar focussed on farm profitability welcomed speakers from The CLA, Agreena and Sentry Farming to share the latest updates to the English Sustainable Farming Incentive (SFI), how carbon farming can provide an additional revenue stream to stack with government schemes and applied examples on how SFI actions has increased farm income on a range of Sentry Farms.
With the SFI, Joe Morrell of Sentry highlighted how you can start small with simple actions which you already so on your farm and build up later. There are also more options which have recently be released by Defra, which Cameron Hughes from the CLA previewed.
Cameron Hughes also provided insightful updates on recent changes to SFI actions, as well as how it can boost farm income from a stacking analysis from the AHDB. Joe Morrell of Sentry Farms went into further detail on how implementing SFI actions bolstered farm income across a range of Sentry Farms and provided gross margins for popular options available in the scheme.
SFI Updates
Since the original launch of the SFI actions, there have been a few changes, with more set to come. See Cameron’s round up of updates below:
- As of 26th March 2024, six land conversion actions have been capped to 25% of your eligible holding area. These actions are:
- IGL 1: Take improved grassland field corners or blocks out of management
- IGL2: Winter bird food on improved grassland
- AHL1: Pollen and nectar flower mix
- AHL2: Winter bird food on arable and horticultural land
- AHL3: Grassy field corners and blocks
- IPM2: Flower-rich grass margins, blocks, or in-field strips
- Looking into the 2024 update & beyond:
- From August 2024 you will no longer be required to be BPS eligible to enter into an SFI agreement, making it easier for tenant farmers to access.
- Five year agreements to become an option when merged with Countryside Stewardship (CS).
- 102 further actions for the 2024 scheme are to be released in May 2024. Testing of this will begin in June and applications open from July with first payments from October 2024.
- A further 12-15 options will be offered later in 2024.
- The minority of actions require endorsement.
Since the scheme launched, there have been over 20,000 applications and so far there are 16,300 live agreements. The Rural Payments Agency (RPA) are receiving an average of 900 applications a week, suggesting the scheme is proving popular among the farming community.
How does SFI affect farm income?
As well as providing updates on the SFI scheme, Cameron Hughes also shared some insightful data from the AHDB* showing how ‘stacking’ SFI actions can provide a lifeline to farmers struggling to balance their finances with the withdrawal of the Basic Payment Scheme (BPS) payments.
The data showed the difference in SFI income from two different applications on the same 455ha farm in East Anglia – one which only adopts some of the basic actions (which most farmers are already doing to comply with farm assurance) and another which adopts a variety of actions for regenerative practices.
‘Lite Option’ – adopting basic actions:
While adopting these SFI actions does increase the net profit by 4%, it only goes a small way to recuperating the income lost by the withdrawal of BPS payments.
‘Ambitious Approach’ – adopting a variety of SFI actions:
By using some land conversion actions and transitioning to regenerative farming practices, the total amount payable goes a lot further towards covering the loss of BPS income.
*The AHDB SFI Stacking Analysis is based on payments offered in November 2023. An update to the stacking analysis will be released in due course, as the new 2024 offer has since been published.
Benefits of SFI
- BPS payments are being cut by up to 50% in 2024, SFI could replace some of that income
- SFI is flexible and you can stack actions to generate further income
- There are no minimum or maximum areas (with exception of 6 land conversion actions) – meaning you can put as little or as much of your farm into the scheme as you like
- Three year agreement with quarterly payments – helpful for cash flow
- You might already be doing some of the actions – may as well get paid to do them
- The application process is online and automated and the processing of applications is fast
How to implement SFI on your farm – what’s a good starting point?
The best way to decide which SFI actions are best suited to your style of farming is to look at what you’re already doing and check whether any options will pay you for that, such as:
If you’re not ready to take on any other actions which may require you to adjust your farming practices, you can make more than one application and have more than one SFI agreement. Start by getting paid for the basic actions above, some of which are already requirements for farm assurance and other schemes. Then, when you want to start with other actions with field-based options, you can make a second agreement with them.
What returns can I expect to see by implementing SFI actions across my farm?
While some of the land conversion actions offer a gross margin to compete with wheat and barley crops, some of the other actions show a poorer return on investment.
See the below net return calculations for SFI actions accompanying agricultural production:
Joe Morrell explained “some of the popular options such as cover cropping aren’t huge money makers, but the establishment costs are covered and there are further benefits such as improved soil health and biodiversity.”
Looking at actions which show more favourable returns, Joe revealed that herbal leys and legume fallows are being implemented across Sentry farms as a break crop in cereal-heavy rotations. High value options such as grassy field corners are being implemented in smaller fields or sections of larger fields where it is difficult to establish a crop. To maximise the income on these areas, Joe recommends stacking IPM4 (no use of insecticides) on top of other options.
See below net return calculations for SFI actions replacing agricultural production:
With strong net returns, these options are helpful to utilise in small or difficult areas to crop and competes well with wheat and barley gross margins.
What does this look like in practice?
Example 1: 200ha conventional farm
Adopting basic SFI actions which don’t impact agricultural production, including:
- Soil testing
- Nutrient management and integrated pest management plans
- Hedgerow actions
SFI income from basic options = £6,718 per year, yielding a net return of £5,188 per year.
Example 2: 200ha regenerative farm
Adopting the above basic SFI actions, plus:
- 20% of farm area using cover crops (SAM2)
- 20% of farm area using companion crops (IPM3)
- IPM4 (no use of insecticides) also implemented on cover and companion cropping areas
- Grass field margins (AHL4) around all fields
SFI income = £22,628 per year, yielding a net income of £16,072
Example 3: 200ha regenerative farm adopting land conversion options
Adopting the basic SFI options in Example 1, plus:
- 15% of farm area using cover crops (SAM2)
- 15% of farm area using companion crops (IPM3)
- IPM4 (no use of insecticides) also implemented on cover and companion cropping areas
- Grass field margins (AHL4) around all fields
- 25% of farm in land conversion options
- Pollen & nectar flower mix (AHL1)
- Winter bird food (IGL2)
- Flower rich grass margins, blocks or in-field strips (IPM2)
SFI income = £60,188 per year, yielding a net income of £48,868
Sentry Farms SFI Agreement Examples
- Sentry Farm 1: 407ha, Essex
- No insecticide use across whole farm (IPM4)
- Legume fallow (NUM3) is used as a break crop
- Companion cropping (IPM3) with winter wheat
- Winter bird food on improved grassland (IGL2) on 35ha grazing land
- SFI income = £85,600
- Sentry Farm 2: 438ha, Hampshire
- No use of insecticides (IPM4) on all spring cropping and OSR
- Companion cropping (IPM3) with OSR
- Cover cropping (SAM2) before all spring cropping
- SFI income = £36,000
- Sentry Farm 3: 530ha, Bedfordshire
- No insecticide application (IPM4) on 30% of farm
- Cover cropping (SAM2) on 20% of farm
- Companion cropping (IPM3) on 30% of farm
- Winter bird food (AHL2) and flower rich plots (IPM2) on 22% of farm
- Grass field margins (AHL4) totalling 6ha
- SFI income = £75,200
What are the new options coming in the 2024 offer?
There are a total of 102 actions in the 2024 offer – 50 new SFI actions plus 52 upgraded Countryside Stewardship (CS) actions. At the time of the webinar very few details had been released, since then Defra have released details of actions, requirements and payments including:
- No-till farming – £73/ha
- Variable rate nutrient application actions – £27/ha
- Camera or remote sensor guided herbicide spraying – £43/ha
A full list of the 2024 offer can be found here, or take a look at the details for each action on the government website.
How much should we rely on SFI – is it here to stay?
With a potential change of government at the forefront of many minds, some may question if it’s worth getting excited about SFI if it may be scrapped when a new cabinet is formed. Despite these political uncertainties, the scheme’s alignment with the broader agenda of ‘public money for public goods’ should provide comfort that it’s here to stay. Cameron explained that “although some of the details of the scheme may change, the direction of travel will remain the same.”
In terms of the income received from the scheme, there is no need to worry about cuts as there is pressure to spend the money. For the past two years, the government hasn’t spent their 5-year average of £2.4bn and has therefore not limited spending on SFI in 2024.
What other schemes are available?
If you’re not sure if SFI is the right scheme for you, there are a few other schemes available providing support to farmers, including:
- Countryside Stewardship (CS)
- Providing farmers, foresters and land managers financial incentives to look after the environment by increasing biodiversity and habitats, expanding woodland area and improving water quality, air quality and natural flood management.
- Funding is provided through a combination of capital grants and agreements.
- Farming Investment Fund (FIF)
- Grants for farmers to help improve the infrastructure of their farm
- Including the Farming Equipment and Technology Fund (FETF)
- Grants to help towards costs of items to improve farm productivity, manage slurry and improve animal health and welfare
- Future Farming Resilience Fund
- A Defra-funded initiative to provide business support to farmers and land management during the early years of the agricultural transition.
- Grants have been awarded to organisations who will then provide free advice and support to farmers and land managers to:
- Understand the changes that are happening in the agriculture sector
- Identify where their business models may need adapting
- Access advice and support while they are adapting
- You can get help and support with SFI applications, farm business benchmarking and one-to-one farm visits. Some providers are also offering carbon audits
- The CLA are urging their members to make the most of this service
- This scheme has less than a year left to run and there is no plans to re-launch it after March 2025 so make the most of it while it’s there!
SFI FAQ
Q: Where can I get help and advice on SFI?
A: As part of the Future Farming Resilience Fund, farm advisory businesses have been awarded grants to provide farmers with advice on schemes including SFI. Sentry is one of these providers and are offering free SFI proposals and advice to help navigate the scheme. A full list of providers, by county, can be found here.
Q: Can you stack carbon credits, SFI and Stewardship?
A: For the SFI 2023 offer, the same area of land can be entered into an SFI agreement and a private sector scheme arrangement, such as carbon trading or payments for natural flood management. This approach to private sector schemes will be reviewed by Defra annually – guidance can be found here. If you have an existing Countryside Stewardship agreement, the actions you enter into SFI must be compatible and you cannot be paid twice for the same action(s).
Q: Regarding direct drilling in grassland – should I wait for those options to become available before applying?
A: You can wait and make one, larger agreement, but if there are actions already available that you could be getting paid for, start getting paid for those then make a separate agreement for further actions down the line. Applications are not as painful as before, making it easier to be in more than one agreement.