Stacking options for SFI

Applications for the Sustainable Farming Incentive (SFI) 2023 opened on 18 September 2023. We look at how stacking various SFI actions can impact the bottom line of farm businesses.

What is stacking?

Stacking refers to selecting a number of actions within one three-year SFI agreement, which may or may not be for the same parcel of land.

We have examined the impact of stacking on three UK sectors:

• Arable
• Dairy
• Beef and sheep farms

Using AHDB virtual farms, we’ve calculated:

• The effect of combining different SFI actions on the farm’s ‘bottom line’
• The payment farm businesses could receive for SFI actions once costs have been subtracted

Key messages

• The SFI alone is not going to be enough to mitigate the loss of Direct Payments – this is an intentional feature of the scheme. But the right combination of actions could make up a considerable amount of the shortfall
• Taking part in the SFI can provide substantial extra income for farm businesses
• If farmers carefully select SFI actions that are right for their farm, they can boost the farm’s net profit level
• Farmers have the opportunity to maximise the potential of every hectare of land on their farm
• The SFI has a greater impact on farms with low gross profit margins compared with those that have high gross profit margins
• For all farms, the financial benefit of taking part in the SFI is most likely to be felt in years where market prices are average or below average; it can act as a buffer in lean years
• Looking ahead, the SFI can play a role in stabilising farm business incomes

Evolution of the SFI and our analysis

2021 SFI pilot Towards the end of 2021, around 900 farmers joined the SFI pilot, which offered payments to farmers for carrying out a prescribed set of environmental actions under eight standards, each having three ambition levels: introductory, intermediate and advanced. The higher the ambition level, the higher the payment.

2022 rollout In 2022, a wider rollout of the scheme, which was open to all farmers eligible for the Basic Payment Scheme (BPS), was introduced with three available standards and up to two ambition levels. Our 2022 analysis, ‘Assessing the impact of the Sustainable Farming Incentive on farm businesses’, examined the effect of these SFI standards on farm profit levels.

2023 offer In the 2023 offer, individual actions replace standards. This provides more flexibility for farmers to choose what is best for their farm and circumstances.

This analysis has been carried out using the AHDB virtual farms. These are theoretical farms that exist on a spreadsheet and are designed to be representative of ‘typical farms’. They have been created as middle 50%-performing businesses.

Arable (455 ha)

Location East of England

Type of business Partnership: 65% owned, 35% rented (FBT)

Soil type Lime-rich loam and clay soils with impeded drainage

Cropped area 450 ha

Land use Crops (% cropped area): Winter wheat groups 1 and 4 (63%); Winter beans (8%); Winter OSR (7%); Spring barley (17%); Countryside Stewardship mid-tier (5%)

Livestock None

Pests and diseases Black grass, Cabbage stem flea beetle

Min-till 2 passes; rotational ploughing (25% of land each year)

Labour Family labour (2 people), harvest help for 6 weeks

Performance level Yield: Middle 50%

Dairy (105 ha)

Location Derbyshire

Type of business Sole trader: 75% owned, 25% rented (FBT)

Soil type Lime-rich loam with good draining

Cropped area 10 ha (maize)

Land use 

• 55 ha temporary grass area (3 year leys), grazed and silage – medium intensity
• 35 ha permanent grass area, grazed and hay – medium intensity

Livestock 170 cows (milking herd), 30 dry cows; commercial black and whites; lactation average 7,800 litres; concentrate feeding 2.5t/cow; calving period (AYR)

Pests and diseases Rotavirus, mastitis, Johnes, pneumonia, BVD

Min-till  n/a

Labour Family labour (2 full-time, 2 part-time) employees (one, full-time)

Performance level   Middle 50%

Lowland mixed farm (220 ha)

Location Yorkshire and the Humber

Type of business Partnership: 60% owned, 40% rented (FBT)

Soil type Slightly acid and base-rich loam and clay soils

Cropped area 90 ha

Land use (% cropped area) 

• Winter wheat (60%); Spring barley (25%); Winter OSR (15%)
• 40 ha of 5-year ley and cover crops in Countryside Stewardship mid-tier 90 ha; permanent grassland
• 55 ha temporary grass area (3 year leys), grazed and silage – medium intensity

Livestock 

• 100 beef cattle for finishing (feed ration: homegrown barley grain and straw, baled grass silage)
• 200 breeding ewes lambing in March, sell lambs predominantly as stores, remaining lambs finished on farm

Pests and diseases Clostridial, Endoparasites (scab/ticks)

Min-till  n/a

Labour Family labour, contractors used for shearing and baling silage/ straw and hedge cutting

Performance level   Middle 50%

Lowland beef and sheep farm (150 ha)

Location South-west England

Type of business Sole trader: 50% owned, 50% rented (FBT)

Soil type Freely draining slightly acidic loam soils

Cropped area None

Land use  

• 25 ha temporary grass area (3 year leys)
• 120 ha permanent grass area

Livestock 

• 50 suckler cows calving in March providing calves into the finishing herd
• 110 beef cattle for finishing in the winter, additional cattle bought in as yearlings
• 400 breeding ewes lambing in April onwards and rearing lambs for finishing

Pests and diseases Bovine TB, Lepto, Johnes, Blackleg, Endoparasites, Liverfluke, Husk, Pneumonia

Min-till  n/a

Labour Husband and wife plus part-time from son/daughter

Performance level   Middle 50%

These tables show the breakdown of payments received by the farm for each selected SFI action after the costs are subtracted. They accompany the graphs which show the three-year projection of income received by the farm from Direct Payments and SFI actions in the analysis.

Arable tables (breakdown of SFI payments for Figures 2,5 and 7)

Dairy tables (breakdown of SFI payments for Figures 2 and 4)

Beef & lamb tables (breakdown of SFI payments for Figures 2, 4, 6 and 8)