Cost/benefit of SFI agroforestry actions

What to consider when estimating the costs and benefits of introducing agroforestry to your farm, and how the 2026 Sustainable Farming Incentive (SFI26) scheme rewards farmers in England.

SFI26 has two agroforestry actions available:

• AGF1: Maintain very-low-density in-field agroforestry on less sensitive land (payment rate: £248 ha/year)
• AGF2: Maintain low-density in-field agroforestry on less sensitive land (payment rate: £385 ha/year)

The SFI cost/benefit tool provides default indicative costs for most of the SFI26 actions. However, it does not provide costs for the two agroforestry actions above.

This is because costs vary considerably depending on the nature of farm and type of agroforestry system introduced.

Below we provide information on what to consider when estimating the cost/benefit of introducing agroforestry to your farm. It is adapted from The Agroforestry Handbook published on the Soil Association website.

Different types of trees with different products will mature at different times: some species take years to produce a marketable crop.

You also need to consider how an annual crop or livestock grazing underneath an agroforestry system could change over time. For example, as the trees grow they will increase shade and shelter, which may benefit livestock and crops by providing protection from adverse weather conditions.

• How many hectares of crop or how many head of livestock do you have on farm?
• How many hectares of agroforestry are to be planted?
• How does the area allocated to agroforestry change your cropping or stocking area?
• What are the outputs and inputs from each enterprise?
• For agroforestry, a multi-year approach will be needed, reflecting the productivity of the trees as they mature

There are three elements to consider regarding agroforestry costs:

1. Capital – purchase of trees: this is a lump sum and should be treated similarly to land, building or machinery purchases (as well as receipt or repayment of loans), and so this should be removed from the budget as it’s not part of normal trading.
2. Ongoing management – establishing, staking, guarding, pruning, understory weed control, and harvesting.
3. Benefits received from trees – for example, income (from fruit, timber) or services (such as shade, shelter or browse provision).

This approach allows you to calculate the net present value (NPV) of having an agroforestry system on farm; it indicates the opportunity or risk by comparing future cash flow/revenue from the agroforestry enterprise to the initial level of investment.

Table 1. Example template for apple trees (adapted from The Agroforestry Handbook)

Source: Adapted from The Agroforestry Handbook

Table 1 shows that, initially, the costs associated with agroforestry will outweigh income.

In the earlier stages of carrying out SFI actions AGF1 and AGF2, the payment rate will help cover these initial costs to varying degrees based on individual circumstances. Once the trees mature and start producing their main product, the income starts to outweigh costs.

You can compare the gross margin of planting trees in an area of your farm with growing crops or keeping livestock. This will give an indication of the opportunity cost involved in carrying out the agroforestry action.

The SFI cost/benefit tool provides the costs and benefits of SFI actions over three years (the duration of an SFI26 agreement).

For the agroforestry actions AGF1 and AGF2, you will need to align your costs to where you will be in your agroforestry production cycle. If the trees are producing product, the income from these products will need to be subtracted from the costs in order to calculate the accurate net benefit of the action per year.

Trees could also generate carbon or biodiversity credits as income.