How arable and livestock farmers can 'stack' Sustainable Farming Incentive (SFI) actions to boost income

Our latest analysis highlights the potential benefits to farmers of stacking SFI options.

We have analysed the effect on farm businesses of stacking elements of the SFI on arable, beef and sheep, dairy and mixed farms in England, as well as how to combine actions within the scheme. Our work outlines the costs associated with each action and any income foregone from entering into SFI on specific farm types.

The analysis reveals the following:

• It supports Defra’s clear messaging that SFI will not replace Direct Payments
• Taking part in the programme can considerably boost farm business income when SFI options are stacked effectively
• The cost of entering into each action and the cost of any corresponding loss of output needs to be considered
• The effect on both income and net profit will vary widely between farm businesses depending on their individual circumstances
• Farms with more unproductive or less productive land available to enter into SFI will benefit more from SFI due to less income foregone
• SFI stacking has a stabilising effect on farm incomes, with an amplified effect in years of high input prices or low output prices

Farm businesses can potentially gain significant additional income from stacking SFI actions.

Additional revenue per annum over a three-year period from SFI ranged from £7,000 to £11,000 for a 105 ha dairy farm, £6,000 to £8,000 for a 150 ha beef and sheep farm, £10,000 to £15,000 for a 220 ha mixed farm, and between £17,000 and £46,000 for a 455 ha arable farm. The higher revenues are generated by more ambitious actions selected from the scheme.

AHDB Senior Economist Dr Amandeep Kaur Purewal said:

“No action in the SFI is going to be enough to mitigate the loss of Direct Payments. However, our analysis has illustrated that the right combination of actions could go a long way to make up some of the shortfall and play a role in stabilising farm incomes.

“With applications now open for SFI 2023, it’s in farmers’ interest to investigate which options work for their farm. The SFI provides the opportunity for farmers to maximise the potential of every hectare of land on their farm. The 2023 update of the SFI offers farmers much more flexibility in terms of choosing actions which suit their farms.

“It is important to remember both the financial and practical implications involved, such as the cost of implementing each action as well as how that will work on a practical level within the wider farm business. Careful planning and selection is essential to ensure farmers get the best economic combination for their farm.

“Our analysis is very much aimed at helping our levy payers make informed decisions about their business in the fast-changing agricultural landscape, and we are planning to follow up with further analysis as the scheme evolves further.”