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SFI Ramblings

Having spent a lot of time on farms over the past 18months looking at SFI specifically, I thought it was about time to put together an article about my thoughts on SFI generally as well as touching on some of the new options that will be going live on the 22nd of July.

 
 

SFI planning approach


Now I should point out that I often take the Yorkshire approach of trying to squeeze every penny out of the SFI. My favourite line to encourage farmers who think the hedgerow tree payment isn’t worth applying for is “If you walked around each field on your farm and stumbled across a crisp £10 note every 100m I’m certain you would pick them all up” – this has convinced all but one to change their mind. (I’m referring to existing trees here).

 

On this point, whilst on SFI farm visits, I often hear something along the lines of “oh well that’s not much for doing that, barely worth the time applying” but once you tally it all into a spreadsheet it is surprising how it all starts to add up. My approach is to enter everything we can sensibly be doing into the SFI spreadsheet calculator to come to the maximum figure, and then deduct the “too much hassle, too restricting or maybe next year” options from that point. Seeing that maximum figure drop can be quite the motivator to make the options work. 

 

A phrase I too often use on farm when planning SFI is “don’t let the tail wag the dog”. In the context of SFI I’ve taken this to mean that the farming system comes first, you want to fit in SFI options to complement and enhance your system, rather than getting locked into a complex and restricting agreement.  


So that gives the rather mixed message of… “Claim as much as possible without restricting yourself”… a delicate balance requiring careful consideration.


What is possible financially from SFI? 


Now, it is the unfortunate reality that if you are committed to farming conventionally and don’t have the capacity or opportunity to tweak your system then the amount of SFI funding that will be available to you will be likely limited to the baseline options, adding up to something in the region of £4,000-£7,000 (depending on the size of your farm). I’ll use a farm size of 100ha to Illustrate this: 

Option 

Units

Payment 

Soil assessment £6/ha +£97

x 100ha

£697

IPM plan £1,129

x 1 plan

£1,129

Nutrient management plan £652

x 1 plan

£652

Hedgerow assessment £5/100m

*let’s say 7,000m

£350

Hedgerow management £13/100m

x 7,000m

£910

Hedgerow trees £10/100m

x 3,500m 

£350 

Administration payment 

x 1  

£1,000

Total SFI income

£5,088

Total per ha 

£50.88

As a % of 2020 BPS income 

22%

It’s important to consider the fact that small farms are still receiving ~50% of 2020 BPS in 2024, so in this example that brings us to 72% of 2020 BPS payments for 2024 (not adjusted for inflation!) – To bring that payment up we are going to have to adopt some new practices or simply be happy with the freedom to continue as we wish, receiving less subsidy – a choice that some farms prefer.

 

As BPS reduces further, dwindling to £0 in 2028, it will be interesting to see which SFI payments will increase and how much by. Only time will tell, but as BPS is reduced, in theory SFI payments will increase over time. One thing is for certain - those delivering the most environmental benefit will also receive the most financial benefit.

 

If we are willing to go the whole hog and incorporate and stack all the SFI options that we can, what sort of income are we looking at? For this example, I will include very few options that take land out of production to demonstrate what is achievable whilst still farming as much land as possible. Again, I’ll stick to that 100ha example as above and imagine that it is a mixed farm with a standard rotation with some grass leys included.

Option 

Area or length 

Payment 

Baseline options as above


£5,088

Companion cropping Wheat (beans or clover) and OSR (buckwheat) £55/ha

48ha

£2,640

No insecticide £45/ha 

65ha

£2,925

Direct drilling £73/ha 

65ha

£4,745

Variable rate application of nutrient £27/ha 

98ha

£2,646

Multi-species winter cover crops before spring barley £129/ha

17ha

£2,193

Herbal leys on the grassland £382/ha

33

£12,606

Squaring off any awkward corners and poorer yielding areas with Grassy field corners £590/ha

2ha

£1,180

Pond management £257/pond

3 ponds 

£771 

Total SFI income

£34,794

Total per ha 

£347.94

As a % of 2020 BPS income 

151%

Of course, we have plenty of additional costs to deduct from this, not limited to:

  • 48ha of companion crop seed

  • Costs associated with variable rate nutrient application mapping and equipment

  • 17ha of multi-species cover crop seed and establishment

  • Herbal ley seed cost and establishment 

  • Labour and depreciation 

  • Yield penalty from no insecticide? 


It also assumes the farm has already successfully adopted direct drilling and has access to the relevant equipment, as well as the ability to commit to 3 years of direct drilling on the same field, given the non-rotational rule of SOH1.

 

Back of the napkin maths suggests we may be left with between £230/ha and £260/ha for the above scenario depending on seed choices but of course costs will be different for every farm, it is vital to work these out before committing to an agreement. 


It is also important to note and to take into account the potential economic benefits beside the actual payment such as;

  • Potential disease reduction/ yield increase from companion cropping. 

  • Nitrogen use reduction from companion cropping or multi-species cover crops

  • Soil/nutrient benefits from multispecies cover crops

  • Reduction is wasted fertiliser and increase in crop yield from variable rate nutrient application.

  • Diesel savings from reduced cultivations


The above is at the extreme end of SFI implementation and often the figure we come to is between the two examples.

 

In 2024, what I have generally seen is farm businesses claiming for roughly 35-50% of what they were receiving as BPS back in 2020 before it started reducing. Now given that the average farm will be receiving just shy of 50% of the BPS payments this year, that generally leaves farm businesses back where they started, minus some establishment costs and plus extra administration. 


What about the new options going live this month?


Whilst the headline is now “102 options” - many are quite niche, and I would say there are only a handful or two of the new options that will be useful to the majority currently. I haven’t yet visited a farm that already has robots tucked away in the barns that are capable of zapping weeds with lasers and the frequent complaint that many of the options are off-putting due to the inherent weed population risks they present rings in my ears. 

 

Also, I’m yet to come across a farm business enthusiastic about agroforestry, but I am told the Woodland Trust has enabled the piloting of Agroforestry on 256 farms over the past 10 years, planting over 350,000 trees. The Agroforestry payments for those farmers will be very welcome, it is always a nice surprise to be paid for something you are already doing! 

 

The two standout options from the 2024 expanded offer seem to be:

  • No-till £73/ha 

  • Variable rate nutrient application £27/ha


When combined bring in a very welcome £100/ha. These are the 2 new options that can be used on large areas of land to bring in a hefty payment overall. Many of the other options are likely to be used on much smaller areas of land to top up the total figure, for example an annual payment of £257 for the management of each pond on a farm isn’t likely to bring in thousands of pounds for the business but is certainly a welcome boost.


SFI symbiosis 


Many of the SFI options should be used together to mutual benefit, for example:

  • No insecticide option of £45/ha and incorporating flower rich grass strips at £798/ha in arable fields to support beneficials reduces the risk of implementing the no insecticide option.

  •   No insecticide option of £45/ha plus the companion crop payment of £55/ha can go hand in hand to again reduce risk and increase per hectarage payment. (£100/ha when combined

  •   No-till payment of £73/ha and then using deep rooted multi-species cover crops at £129/ha can work together to support soil health. (£202/ha when combined)


It will be important going forward to keep eyes peeled for productivity grants that also give access to the SFI payments. For example, if you can receive a partial grant for a variable rate sensor, and then also receive an ongoing per ha payment for its use, it would be wise to make use of both! 

 

When approached with an open mind, I really believe there is plenty of opportunity to make use of the SFI and associated grants to really build in resilience into each farm business. 

 

If you have yet to look at all the options, DEFRA’s searchable database makes it quite easy to filter out the options you are eligible for.

 

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