GSC Grays has said the Sustainable Farming Incentive (SFI), despite its problems and delays, may prove to be a “game changer” for farmers.
Rural director at the rural land and property specialist, Greg Ricketts, said the scheme has the potential to boost income for farmers and help them improve their farming technique.
The SFI is currently accepting expressions of interest and will start accepting applications from September 18.
“For some farm businesses, SFI 2023 could be a real game changer in terms of income generation and farming technique,” Ricketts said.
“Perhaps the real beneficiaries will be lowland grass farms which, according to Defra (the Department for Environment, Food and Rural Affairs), are set to experience a 53% decrease in farm profitability between 2022 and 2023 due to increased input costs and reduced Basic Payment Scheme (BPS) payments.
“The government have thought seriously about the initiative and are looking to roll out payments for practices which improve productivity, reduce costs, and reduce reliance on support payments.”
Ricketts said that this is likely to result in farmers having to make “quite significant changes” to their businesses, and that carrying on as they have been farming is not likely to be a realistic option for many.
“It would result in more casualties if farmers chose not to change but it also provides farmers with a springboard to create a business that, over time, will be financially viable without the need to be waiting for the annual government payment,” he said.
Some grassland farmers have already started to introduce herbal leys, GSC Grays said, but did not want the complexity of trying to put in 13 different species as required under a Countryside Stewardship legume and herb rich sward (GS4).
“Under SFI, herbal leys (SAM3) need only two grasses, two herbs and two legumes, allowing farmers to adapt their farming system slightly,” the agency said.
“This means they receive a payment greater than the basic payment (BPS) which they have received historically,” Ricketts said.
“More importantly, in our opinion, there is a focus on profitable production with reduced dependency on feed, fertiliser and fuel inputs and cost which achieves a more profitable system.
“At GSC Grays, we have seen situations where most of the farm is established with herbal leys (£382/ha) where the SFI scheme could deliver a significantly greater overall return than the previous BPS system.”
Initially, Ricketts said there might be some reduction in productivity of livestock but, if balanced correctly against the reduced inputs, the system could still be more profitable going forward than it has been.
“I appreciate the (above) example is at the extreme end of SFI options available, but it highlights the overall potential of SFI to certain farm types,” he said.
“Even where implementation of SFI is not quite as extreme as our example above, there are options for introduction of legumes into grassland swards (£102/ha) and low input grass (£151/ha) which all grassland farmers should be looking at.
“For arable farmers, whilst the payments per hectare may not be quite as great as for grassland, there are still opportunities available where businesses can be adaptable. To benefit from SFI arable farmers must consider their wider rotations.”
Ricketts said many farming businesses, because they have been receiving the BPS, have been farming in ways that “do not leave an acceptable margin”, but have continued to do so because the BPS “bailed them out”.
“Now each business needs to assess whether what they are doing is leaving an acceptable profit after all costs are taken into account,” he said.
“If it does not, they need to ask why they are doing it and should they be looking at alternative options.
“The issue on farms now is determining what to put into the SFI options for each individual farm, rather than the application process itself. This is where some specialist advice and guidance from farm business consultants might be required.”
GSC Grays said it expects further announcements about the additional standards that will become available in 2024 by the end of this year, with the full suite of SFI options available by January 2025.
“We also believe that the scheme will evolve over time and the objective of farmers should be to develop farming systems which are profitable without support,” it said.