The Agriculture and Horticulture Development Board (AHDB) has conducted an analysis of the impact of the Sustainable Farming Incentive (SFI) on various types of farm businesses in England, including arable, beef and sheep, dairy, and mixed farms. This analysis focuses on how farmers can strategically combine different actions within the SFI to enhance their income.
Key findings from the AHDB analysis include:
- The SFI is not intended to replace Direct Payments, as emphasised by Defra.
- Effective stacking of SFI options can significantly increase farm business income.
- It’s crucial to consider the costs of participating in each action and the potential loss of output.
- The impact on income and net profit varies greatly among farm businesses, depending on their unique circumstances.
- Farms with more unproductive or less productive land stand to benefit more from the SFI due to lower income foregone.
- Stacking SFI actions can stabilise farm incomes, particularly in years with high input costs or low output prices.
The analysis indicates that farm businesses can gain considerable additional income by stacking SFI actions. For instance, over a three-year period, additional revenue from SFI ranged from £7,000 to £10,000 for a 105-ha dairy farm, £7,000 for a 150-ha beef and sheep farm, £13,500 for a 220-ha mixed farm, and between £15,000 and £46,000 for a 455 ha arable farm. These revenues are contingent on the selection of more ambitious actions from the scheme.
Dr Amandeep Kaur Purewal, Senior Economist at AHDB, stated, “No action in the SFI will completely offset the loss of Direct Payments. However, our analysis shows that a well-chosen combination of actions could significantly compensate for some of this shortfall and help stabilise farm incomes.”
With the SFI 2023 applications now open, Dr Purewal advises farmers to explore which options are most suitable for their farms. The SFI offers flexibility in selecting actions that align with individual farm needs, maximising the potential of every hectare of land.
She emphasises the importance of considering both financial and practical implications, such as the cost of implementing each action and its integration into the broader farm business. Careful planning and selection are vital for farmers to achieve the most economically beneficial combination for their farms.
Dr Purewal concludes, “Our analysis aims to assist our levy payers in making informed decisions in a rapidly evolving agricultural landscape. We plan to provide further analysis as the scheme develops.”
