Uptake of Countryside Stewardship and SFI 2023: Our analysis

On 3 May, Defra published statistics on the uptake and land use of two key environmental schemes – Countryside Stewardship (CS) and the Sustainable Farming Incentive (SFI). Our analysis considers the competing uses of farmland with commercial crop production.

Key messages

• The cost of SFI/CS implementation (e.g. seed costs, management time), opportunity cost (where an option is competing for land with a cash crop) and the indirect benefits to crop rotations must all be accounted for.
• While some environmental options will be competing for land with commercial crop production, the scale of these options versus the cash crop areas is small. Indeed, if such options are being targeted at problem areas of the farm, there is an argument that they could support productivity growth and food security in the longer term.
• The persistent wet weather since autumn 2023 has been a huge test of business (cash) resilience for farming businesses. SFI is no substitute for the traditional cash resilience of direct payments.

The agricultural area in England

Table 1 gives an overview of agricultural land use in England.

The Utilised Agricultural Area (UAA) accounts for just under 70% of the total land area. Within that, 40% is classified as permanent pasture, which indicates that it is only suitable for growing grass for livestock production rather being able to viably produce other crops in a rotation.

Table 1. Agricultural land use in England in 2023 (units = thousand hectares)

Source: Defra June survey 2023

OSR area has declined

Over the last ten years, the English crop rotation has gone through some structural change, with the oilseed rape (OSR) area in 2023 being almost half of what it was in 2013. This has primarily been driven by increased crop failure risks due to cabbage stem flea beetle, following the effective ban on the use of neonicotinoid seed dressings.

The decline in the OSR area further exacerbates an imbalance in the English crop rotation, which was already suffering from a lack of scalable and viable non-cereal (break) crops. This is one of the productivity challenges facing the industry and something that English farmers might be looking to environmental schemes to help rectify.

Use of environmental scheme options to rebalance rotations

In addition to helping to rebalance crop rotations, farmers may well be looking to environmental scheme options to help manage key weed, pest, and disease threats as part of an integrated pest management (IPM) approach.

Using environmental scheme options to help rebalance rotations, improve productivity and support IPM means that the value of such schemes to farm businesses stretches beyond the cash payment for the action. The big challenge though, at a national level and even farm level, is that the indirect value of such options is poorly understood. More research and insight is needed to better understand these impacts to enable farmers to make informed decisions.

Take-up of key options from CS and SFI 2023

Table 2 summarises some of the key environmental options and their level of take-up in terms of area that they occupy. It is important to appreciate that some of these options can ‘stack’ upon existing production, while others are effectively competing with crop production within the rotation.

Table 2. Land use by selected CS and SFI 2023 options – as at 1 April 2024 (units = thousand hectares)

Source: Defra

One important observation is the difference in scale between the cash crop areas and the CS/SFI options. For example, the first four items in Table 2 are seen as the main options competing with cash crops for area. Combined, these options account for 210,000 ha. This sounds a lot – and is comparable to some of the smaller area crops – but it is still smaller than the decline in the OSR area over the last decade.

Legume fallow and herbal ley options

The legume fallow options appear to be the most appealing to pure arable situations. Note that these options cannot be grazed or foraged, so in areas with proximity to livestock other options are likely to be more appealing. The key indirect value with these options will be fixing of nitrogen for utilisation by following cash crops – supporting productivity and reducing the carbon footprint of production. The current requirements of these options suggest that the SFI legume fallow option affords more flexibility in terms of the area deployed and the ability to rotate from year to year. As such, it would not be surprising to see this option grow relative to its CS counterpart.

Unlike CS, the SFI scheme offers support for the establishment and maintenance of herbal leys. At 175,000 ha, this option is unlikely to be competing with non-forage crops. The value of this option is optimised where the crop can be utilised by a livestock enterprise. It is likely therefore that this option will be displacing other forage crops – especially temporary grassland, which in 2023 had an area of 803,400 ha. This is over 4.5 times higher than the area in the herbal ley option.

Complement or compete?

This data gives some insight into uptake of the broader options that complement rather than compete with commercial production. These will be important metrics in evaluating uptake of SFI and the contribution to environmental policy objectives. For example:

• 1.6 million hectares of land is covered by the soil management option
• 9,100 nutrient management plans are in place
• 8,600 IPM plans are being supported

These are all likely to be important evidence for industry, supply chains and policy makers to help demonstrate environmental credentials.

Current conclusions

1. Value

There has probably been too much focus on the gross value payment of the various options. Account needs to be given to the cost of implementation (e.g. seed costs, management time), opportunity cost (where an option is competing for land with a cash crop) and the indirect benefits to crop rotations. There is probably not a great enough understanding of these yet for the industry to make fully informed decisions. There have been anecdotal reports of whole farms being laid down to SFI options, suggesting focus on the direct cash payment rather than evaluating the complete value offer to the farming system, i.e. rotational benefits to following cash crops.

2. Food security

While some environmental options will be competing for land with commercial crop production, the scale of these options versus the cash crop areas is small. Indeed, previous analysis has shown that moving productive land away from production and toward SFI has a negative economic impact (see our recent article Stacking options for SFI). Targeting of SFI/CS options at problem areas of the farm could benefit long-term productivity and even food security. This is underpinned by the key idea that land is free to move between food production and delivery of environmental goods or even a combination of the two. This is vastly different to other approaches such as mass tree planting, which is clearly a long-term land use change.

3. Resilience

The persistent wet weather since autumn 2023 has been a huge test of business (cash) resilience for farming businesses. Traditionally, businesses would have relied on direct payments to mitigate these cash flow impacts. SFI and its continued development essentially has the potential to provide a diversified income for farm businesses if it is economically viable. However, it must be appreciated that it is no substitute for the traditional cash resilience of direct payments. This will undoubtedly force farm businesses to address the production-linked risks being taken to survive and grow.