Latest SFI offer: Greater ambition and premium payments

The greater flexibility on offer, and the opportunity to combine it with other existing agri-environment schemes, are both benefits of what we know about the Sustainable Farming Incentive (SFI) so far.

While a more complete SFI picture has become clearer, the actions that had already been unveiled in 2023 were to a large extent already available in Countryside Stewardship (CS), but given an SFI identity, and a few new options.

See more: How much income can nature provide on a commercial farm?

This year, the pace of change has escalated and a significant upgrade has finally been delivered.

Among the 50 or so new or repackaged items announced at the Oxford Farming Conference earlier this month by Defra secretary Steve Barclay are 21 high-priority actions which will attract premium payments.

While more detail is needed before the industry will know what combined SFI/CS agreements look like, there has been emphasis given to maintaining and restoring habitats, as well as creating them.

Wider offer

There are also numerous other actions covering all types of farms and landscapes, in a much wider offer that the government hopes will appeal to everyone and address some of the concerns about vanishing farm funds.

A 10% increase in the average value of agreements in both SFI and CS was also unveiled, with the payment uplift being automatically applied to existing CS and SFI agreements.

None of the new actions (see panel) will be open to applicants before summer, but the ability to have two SFI schemes running or to add to an existing agreement on its anniversary means farmers are being encouraged to get on with applications.

As a result, most should be considering how they can combine it with existing arrangements to secure additional income.

“There were synergies before and now we are looking at a combined SFI and CS offer for 2024 and beyond,” says Strutt & Parker’s head of farming, Jonty Armitage.

Additionality

“If you focus on what additionality you can bring, it is possible to have an existing CS agreement and run SFI alongside it. Just remember that you can’t get paid for the same thing twice.”  

Individual farm circumstances will dictate what can be put in place and when that should happen, he adds, but there is a general feeling that – up until this year – there has been more on offer to arable farmers than livestock producers.

The new, wider offer for 2024 should address some of that perceived inequality and make the SFI relevant for all.

The grassland actions are being seen as much more enticing, with the species-rich grassland payment rising from £182/ha to £646/ha, for example.

Likewise, the action known as IGL2, winter bird food on improved grassland, which was new in the 2023 offer, is now worth £515/ha.

Easy wins

For all farms, there are some easy wins – such as assessing nutrient management and producing a plan, for example, or assessing soil, testing for soil organic matter, and producing a soil management plan.

“You can add new actions into an agreement, but you can’t take things away,” says Jonty. “So if you feel you have enough information to make the decision to get started with the SFI, crack on.”

Others will need more detail before committing – the opportunity to have a “better” scheme by waiting until the summer, when the new offer opens, will make some wait until they have all the detail.   

Actions such as no use of insecticides (IPM4 – £45/ha) and companion planting (IPM3 – £55/ha) have already been well-received by cereal growers.

The new no-till action, worth £72/ha, is expected to be popular, as is the summer cover crop action.

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In the absence of detail, Farmers Weekly asked some of the Transition Farmers how they viewed the SFI to date and whether they were tempted by the scheme.

Vaughan Hodgson

Cumbria

Transition Farmer Vaughan Hodgson is frustrated and disappointed by the way the SFI has been delivered to date and believes a great opportunity has been missed.

While he accepts that there are some management actions that will appeal to farmers, he also thinks it has been done on the cheap and payment rates are too low.

“I’m not impressed by the scheme,” he says.

“It lacks imagination. When you consider how much we’re losing in terms of BPS, it’s hard to work out where all the money has gone.

“To my mind, Defra is penny pinching. Many of the actions cost money to implement and result in revenue foregone, while the various associated grant schemes that keep being launched need applicants to invest big sums of money.”

Looking at the SFI hedgerow actions, for example, Vaughan points out that £3/100m to assess and record the condition of hedges would cost him money to carry out.

He is also doubtful about the long-term benefit that the SFI will offer to the environment, which is a priority the farming industry has been tasked with.

“It’s a sticking plaster approach. If the government really wants us to deliver for nature, it will need to look again at what it is going to pay. A 10% average uplift helps, but not hugely.”

He has an existing Mid-Tier Countryside Stewardship scheme on the farm that works well and has started an SFI application, only to discover that it would contribute just 8% of his previous BPS cheque.

“One of the issues for us is that we would have to take land out of production to get any more. That just increases our fixed costs on the rest of the farm, at a time when all our costs have increased considerably.

“So it will affect our margins, which are under enough pressure. The combination of lost income, higher costs and unattractive payment rates that the SFI entails are a big concern for this business.”

Vaughan does accept that there are some SFI options that are less risky and he is trying to keep an open mind. “But I have to be realistic about what it offers to our farm,” he says.

Andy Bason

Newhouse Farm, Hampshire

Having started a new and much bigger Mid-Tier Countryside Stewardship scheme last year, before the SFI was launched, Transition Farmer and Hampshire farm manager Andy Bason is now considering how the SFI could work alongside it.

Depending on how bold he is prepared to be, it could potentially add another £30,000 to the farm’s income, he calculates.

“That’s without having to change the way that we are farming,” he says. “So actions such as the use of companion crops and no use of insecticide, as well as preparing integrated pest management (IPM) and nutrient management plans, are obvious ones for us.”

The cover crops at Newhouse Farm are already funded by Southern Water, so they will remain outside the scheme for now.

Andy is also wary of the hedgerow actions, as he needs the flexibility of being able to manage hedges every third year, when spring crops are in the ground.

He likes the look of the new action AHL3, grassy field corners and blocks, which pays £590/ha.

“We have got some field corners and old margins which aren’t attracting any funding at the moment, so they would be suitable for that.”

An agroforestry SFI action is also welcome news, he adds.

“As an early adopter, we’ve been on our own with that and deer pressure has really taken its toll on our trees. So support in the form of an SFI payment and a capital grant is good.”

Only one piece of land – a very wet headland – would be put out of production.

“Putting that into the SFI changes the way that we’re paid for things, rather than limiting our production.”

Kit Speakman

Essex

As the farm is already heavily involved in an existing Countryside Stewardship scheme, Essex grower and Transition Farmer Kit Speakman has limited scope to benefit from the SFI if he doesn’t want to take land out of production.

He has, however, identified some obvious actions – such as soil sampling, nutrient management planning and IPM plans – that are easy wins and will work alongside his current arrangements.

“We are applying for it but it seems there are issues with the application process when trying to do CS and SFI actions on any given land parcel that the Rural Payments Agency has yet to resolve.”

As funding is needed by the farming sector more than ever, he is taking a flexible approach to agri-environment schemes and capital grant funding to maximise farm income.

He is also on board with the environmental benefits that schemes are aiming to provide.   

“Unfortunately, the payment rates for both SFI and CS aren’t exciting and incomes will fall far short of those when we had BPS,” he says.

Kit runs a highly diversified business and recognises that his is fortunate to be located in an area that allows that.

“It really helps to supplement our income and de-risks the business against fluctuating commodity markets and rising input prices.

“But not everyone is able to do that and I feel for farms in more isolated areas.”