Getting to grips with SFI
As BPS is phased out, many landowners’ heads have turned to the Sustainable Farming Incentive (SFI) as a potential source of income to replace it. Although the scheme and ELMS in general got off to a confusing start, Countryside Stewardship (CS) and the SFI will be merging this summer under the Combined Environmental Land Management Offer.
“We are still not 100% sure what this will look like but essentially the CS options and the SFI options available now will merge, and farmers will be able to choose which options they would like to do in one application portal,” explains Anna Hicks, Carter Jonas Associate.
“SFI is becoming more popular because farmers are really starting to feel the impact of the reduced payments under BPS.”
Defra has a target of enrolling at least 70% of eligible farmers in England to its Environmental Land Management (ELM) programme by 2028, with further actions and an uplift in prices announced by Environment Secretary Steve Barclay at the Oxford Farming Conference in January.
To date (1 April 2024), more than 20,000 applications have been received and 13,900 schemes have been approved and are live. This covers an area of two million hectares, or around 15% of the total land in England.
Experts at Carter Jonas have been busy helping farmers apply for the SFI and have discovered that the actions available suit all types of farms and can easily be used alongside food production. In many cases, farmers can claim for actions they are already undertaking on their site.
Popular actions
The SFI is designed to be flexible after criticisms levelled at the CS scheme highlighted how complicated it was to use in practice.
“The CS scheme was too complicated – realistically, very few farmers would have been able to design a scheme without making changes to their farming practices,” Anna says. “However, the SFI is more straightforward with much greater flexibility. It is possible to choose actions under SFI which fit into current farming practices. Clients I have assisted with SFI are surprised how much they are already doing which is compliant with the scheme”.
“Under SFI, a farmer can put every field into the scheme or just one field – so we have got flexibility and a lot of the actions are much less restrictive than CS.
“For instance, under CS permanent grassland with very low inputs could not be cut until 30 June. The SFI stipulates that you must have seven weeks in the spring/summer where you do not cut or graze the grass, but a lot of farmers do not cut before mid May anyway”.
Farmers do not necessarily need to take fields out of their rotation or change their business significantly to take part in the scheme.
“We have some clients whose priority is food production, and they want to crop every area of their farm,” Anna says. “We have still managed to put applications together for them.
“Most farmers already soil test because it is a regulatory requirement and many already create pest and nutrient management plans. There are quite chunky payments available for these actions, so you do not always need much more than that to make an application work.”
Popular actions include LIGI (manage grassland with very low nutrient inputs) and AHL2 (winter bird food arable land).
“A lot of grassland will already be low input grass, so farmers can get £151/ha for essentially not changing anything at all,” Anna explains.
“The most popular arable option has probably been the winter bird food which is the highest paying action at £853/ha. If farmers dedicate a whole field to this action they can stack the no insecticide payment on top (£45/ha). We have a number of clients dedicate whole fields to these actions, but others have just used awkward corners that are not productive or lie wet.”
As farmers struggle to decide which break crops to grow, the NUM3 (legume fallow) action is also proving popular.
“A few clients have found their oilseed rape break crops have failed or they are struggling to find a profitable break crop to grow, so they have opted for legume fallow instead,” Anna adds. “Farmers just need to make sure they have considered the potential risks and assessed whether or not it fits into their rotation – this is something Carter Jonas or organisations such as the Processors and Growers Research Organisation can help with.”
With up to 50 new actions set to be unveiled in the summer, farmers already in an SFI or about to start one may question how that will impact them.
“Farmers will be able to stack the new actions on top of the current actions,” Anna explains. “Those farmers already in SFI can add the new actions when they get to the end of their first year or put together a new application. There is a rolling application window, so this allows complete flexibility. The payments under SFI are quarterly in arrears so this does help with budgeting.”
Case studies
The SFI is suitable for all farms; Anna is keen to emphasise that it is not only suitable for larger businesses.
An example of a smaller farm using the SFI to recoup its BPS payment is Pool Farm, a grassland farm extending to 29ha of permanent pasture. The farmer does not currently have any other stewardship on the farm and his BPS payment before reductions was around £6,450/year.
“Soil testing is a very popular action,” says Anna. “This particular client does not currently soil test, so we suggested that this is something he would like to start doing.
“The payment of £270/year is not particularly large but it is something the client was interested in doing.
“He has also opted to create a pest management plan and a nutrient management plan, and we have recommended a local agronomist who can help him put these into place. These plans need to be completed by a BASIS- or FACTS-qualified person”.
The main action for this farm is LIG1 (manage grassland with very low nutrient inputs) which pays £151/ha. This has been implemented across the whole farm, so the total payment per is £4,380/year.
“Adding the management payment of £580/year, the annual total comes to £7,011 which is more than this client was getting under BPS,” Anna explains.
“Hopefully this demonstrates that SFI works on farms and land which on a smaller scale.”
You also do not need to fundamentally change your business in order to apply SFI measures.
Church Farm is a mixed farm with 54ha of permanent pasture and 45ha of arable which is split into cereals and grass leys. The business was previously receiving an annual BPS payment of around £22,000.
“This was an interesting one because the client made it clear that his priority is farming: he runs an intensive dairy farm so everything we are doing within SFI is secondary to what he does on the farm,” Anna says.
Church Farm is a great example of a farmer claiming for work he’s already doing on the farm.
“The client already had overwintering cover crops, so that was just a case of entering the area he uses into the SFI each year and rotating this area around the farm,” Anna says.
“We included HRW3 (hedgerow trees) as he already has an average of one tree per 100m on a certain area on the farm. He also has a small area of grass which is quite steep that he does not apply fertiliser to but does graze, so we entered that into LIG1.
“The client has produced herbal leys in the past and was keen to reinstate them, so the annual payment of £382/ha is attractive for something he was keen to do anyway. Herbal leys is a useful action as there is minimal restrictions.”
“Due to the scale of the farm the farmer can claim the full management payment of £1,000/year giving a total of £18,180.”
SFI also works for larger businesses looking to recoup sizeable BPS payments.
Cotswold Farm has 397ha of arable land and 54ha of permanent pasture, for which the business received a BPS payment of around £100,000/year. The client already had a Mid Tier agreement in place, which included all the grassland and a small area of arable land, so there were limited actions that could be done on the grassland under SFI.
“The client wanted to recoup as much of the £100,000 as possible,” says Anna. “It was a relatively complex process putting the application together as there were a number of different stakeholders all feeding into the process.”
The majority of the payment is covered by AHL2 (winter bird food) which amounts to £70,304/year.
“The client has taken a number of field parcels out of his arable rotation and put them into winter bird food with the aim of moving these around the farm each year. There are also several awkward field corners that lie quite wet and some unproductive areas which the client has decided to put into winter bird food as well. Those will remain in place for the duration of the three-year agreement,” Anna adds.
Altogether the SFI payment amounts to approximately £92,000 which, when added to the existing CS agreement, meant the farm was not far off achieving its £100,000 aim. Of course this is not all profit as there is a cost to establishing the various actions under SFI.
On 25 March 2024, the Government introduced a limit to the amount of land farmers can take out of productive actions under the SFI. This does not apply to existing agreements but will affect new agreements. Anna said: “The 25% limit will only affect a handful of our clients as most are keen to farm as much of their land as viable. However, we have seen examples of farmers entering their whole farm into AHL2 so the limit did not come as a surprise.”
How Carter Jonas can help
Carter Jonas can complete SFI applications and manage the chosen actions for those farmers short of time or unsure how to navigate the system. Generally, the team charges an hourly rate, but a cap has been applied to smaller agreements to ensure the client is fully aware of the costs before proceeding with an application.
“We visit each client, have a look at their land and go through all the actions together. There are a number of actions to discuss so it is important the client understands the criteria for each action before deciding how to proceed. We advise what we think would work best and then put the application together after that. We offer that initial meeting free of charge.
“As well as putting together applications for clients we also offer a management service where we manage the agreement for the entire three-year period and collect the necessary evidence,” Anna says. “On the anniversary of the agreement each year we sit down and discuss what to do for the following year.”
New for 2024
Full details of the expanded and improved SFI offer available to farmers from July 2024 were published by the government in May 2024. The expanded SFI offer will be open to new entrants for the first time (those who did not claim BPS) and will initially comprise 102 actions, including over 20 new options to support more sustainable food production. The new actions include:- Precision farming
- Agroforestry
- Heritage
- Moorland
- Waterbodies
In the meantime, for further information on SFI or CS please contact our rural grant experts in your nearest office.
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