Author: Caroline Ingamells

SFI 2024 – Changes to SFI 2023 Actions

In our article last month which reported on the expanded 2024 offer, we said the 23 SFI 2023 actions would be available in the SFI 2024.  This is true, but there are some (potentially significant) changes to the rules under some of the actions.  Below is a list of some of the key changes, although not exhaustive, and farmers and their advisors should check the new rules for themselves:

  • CSAM3 – Herbal Leys.  This action will now be static.  It is also more prescriptive on the seed mix, which should include at least 1 grass species, 2 legume and 2 herb or wildflower species
  • CIPM2 – Flower-rich grass margins, blocks, or in-field strips.  This action will be static.  In addition, it will only be possible to put ‘part of the available area in a land parcel’ into this action – it doesn’t actually give advice on what constitutes ‘part’ of a parcel
  • CNUM3 – Legume Fallow.  This will be static.  Originally in SFI 2023 NUM3 was a static option and then was quickly changed to rotational.  It seems to have reverted back; this could present a problem to those who were thinking of using legume fallow as a break crop in the crop rotation
  • CIPM4 – No use of insecticide on arable and permanent crops.  If the land is being used to grow arable crops (including non-permanent horticultural crops), this action must be done on one ‘cash crop’ from when it is sown until it is harvested.  Many have been advocating for this
  • CAHL1 – Pollen and nectar flower mix.  This action will be static.  Furthermore, it will only be possible to put ‘part of the available area in a land parcel’ into this action
  • CAHL2 – Winter bird food.  It will only be possible to put ‘part of the available area in a land parcel’ into this action
  • CAHL3 – Grassy field corners and blocks.  It will only be possible to put ‘part of the available area in a land parcel’ into this action
  • CIGL1 – Take improved grassland field corners & blocks out of management.  It will only be possible to put ‘part of the available area in a land parcel’ into this action
  • CIGL2 – Maintain improved grassland to provide winter bird food.  It will only be possible to put ‘part of the available area in a land parcel’ into this action

There are some more ‘general changes’ which sees a slight change to the phrase ‘it is up to you how you do this action‘ which now includes ‘as long as you:

  • follow this action’s requirements – these are identified by a ‘must’
  • do the action in a way that could reasonably be expected to achieve this actions aims

It is our understanding that the new rules will only apply to agreements under the new expanded SFI 2024 offer, but we will endeavor to keep readers informed of any updates.

For those who like a booklet, Defra has provided a pdf version (366 pages) of the actions this can be found via https://assets.publishing.service.gov.uk/media/6655a85d0c8f88e868d33282/SFI-2024-actions-print-version.pdf. 

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Country Landscape

Farm Profits

UK farming made surprisingly good profits in 2023 according to Defra.  The Department has recently released figures for Total Income from Farming (TIFF) – this is the aggregate profit for the whole UK farming and horticultural sector.  The headline figure is that profits fell 16% in real terms between 2022 and 2023, but last year’s figures still came in at a very healthy £7.2bn – the third highest returns in the past 25 years.

The Defra figure for 2023 is much higher than we had been predicting.  We had estimated that profits for the year would fall to around £5bn.  Part of the reason is a sizeable upwards revision for the 2022 year (from 7.9bn to £8.6bn).  This results in the 2023 figure being higher.  There is a history of quite large revisions in the TIFF figures – we would not be surpised if those for the past year were amended in due course as well.

Both crop output and livestock output were down in 2023 compared to 2022 – by 16% and 7% respectively in real terms.  (Both of these drops were lower than we had forecasted).  Variable costs (called ‘intermediate consumption’ in these figures) showed a surpising drop of 9% year-on-year.  The fall was wholly due to a big drop in the value of animal feed consumed on farm.

The chart below shows the evolution (in real terms) of TIFF over the past 25 years.  TIFF shows the return to all entrepreneurs for their management, labour and capital invested.  In simplistic terms, it is the profit of ‘UK Agriculture Plc’.  Also shown on the chart is the contribution of direct support (BPS plus agri-environment scheme payments).  This has declined in recent years as inflation has eroded its real terms value.  However, it continues to contribute a sizeable proportion of farm profits.

Given our belief the 2023 figures might be revised downwards somewhat, our estimate for the current 2024 year is for a TIFF (in real terms) around the £6bn mark.  We would expect costs to rise as inflation continues to work its way through the system.  Harvest 2024 looks set to deliver low yields and unspectacular prices.  In contrast, most livestock sectors are currently having a reasonable year.  TIFF at this level would be very much in the normal range seen over the past few years – discounting the very good returns of the past three years.

The data on farm incomes (profits) comes from Defra’s annual publication ‘Agriculture in the UK’.  This compendium of statstics includes data on all aspects of the food and farming sector.  Full details can be found at – https://www.gov.uk/government/collections/agriculture-in-the-united-kingdom

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SFI 2024 Factsheet

Details of the Sustainable Farming Incentive 2024 offer are now available.  A controlled roll out via Expressions of Interest is currently taking place with the scheme expected to open to all later in the summer.  To assist farmers with understanding what will be accessible we have produced a 4-page SFI Factsheet giving a summary of all the actions that will be available.

Click Here to access our SFI 2024 Factsheet.

If you require advice from one of our consultants, do not hesitate to contact them by email or phone.  Their contact details can be obtained by clicking here. Alternatively, your can also contact our office on 01664 503200 or email [email protected]

If you would like more detail on the Sustainable Farming Scheme as well as additional articles on UK farm business matters, why not subscribe to our Professional Update bulletin? Over the course of each month, we give a concise and unbiased commentary on the key issues affecting business performance in the UK agri-food industry, and its implications for farming and food businesses. You can access a no obligation 90-day free trial via the link below.

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Ending Agri-environment Agreements Early

Defra has released information on how and when existing Countryside Stewardship (CS) and Higher Level Stewardship (HLS) agreement holders can exit their current agreements if they wish to.  From September, CS Mid Tier and HLS agreement holders will be able to apply to end their existing agreements early to go into the SFI or a CS Higher Tier scheme (opening this winter) either:

  • at the end of the current agreement year and receive the full payment due for that year (subject to meeting the requirements of the agreement)
  • before the end of the current agreement year, but not receive payment for the part of the current agreement year that’s already completed

Note, that it will not be possible to end existing agreements before September.

Contrary to previous advice, there will not be any requirement for the new agreement to be the same or ‘better’ than the existing agreement.  Previously the message had been that early termination would only be allowed if the new agreement would deliver the same or greater environmental benefits as the existing agreement.  However, we always thought this would be difficult to show when the system doesn’t allow a new scheme to be applied for when the old one is still running.

If the existing agreement includes an SSSI or Scheduled Monument, agreement holders will need to keep managing the land in line with the requirements of those designations.

The case is not so straight forward for those with a CS Higher Tier agreement.  It will only be possible to end the existing agreement early ‘by exception’.  Defra has not expanded on the criteria for this as yet, and has said more information will be available in the summer together with details on how CS MT and HLS agreement holders can apply to end their agreements.

In terms of agreements which end on 31st December 2024, Defra has said it should be possible to apply for an SFI or CS Higher Tier agreement ahead of this date, so that the new agreement is ready to commence on 1st January 2025.  Furthermore, agreement holders are reminded that they can apply for an SFI agreement to run alongside an existing agreement as long as the actions under both schemes are compatible and there is no double funding.

Ending an existing agreement early to enter the SFI is one of the most common questions we receive.  This does give a time frame, even if we still don’t have all the detail.  We also know of cases where there has been a problem applying for SFI when an HLS or CS agreement is coming to an end or has recently finished, hopefully this means Defra has addressed or will be addressing this problem shortly.

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Country Landscape

Loam Farm Update

The 2024 harvest year continues to be challenging for cereals farmers.  Whilst dryer weather has allowed some spring operations to progress, the wet weather since the autumn has already affected the likely financial returns for the coming harvest.

In light of these difficulties we have updated our Loam Farm Model.  Loam Farm is a notional 600 hectare business that has been used since 1991 to track the fortunes of British combinable cropping farms.  It is partly owned and partly rented and is based on real-life data. It has one full-time worker and employs harvest casual labour.

The farm has just finished its sales from harvest 2023.  It can be seen that the returns have been far lower than the previous 2021 and 2022 harvests.  However, those two were unusually good (some of the best profits Loam Farm has seen in 30+ years).  The results for harvest 2023 are far more in line with historical averages.  However, even with the farm making a profit, the business is under some cashflow pressure due to higher working capital requirements and the need to pay tax on the profits from the two previous good years.

For harvest 2024, variable costs have reduced – mainly lower fertiliser values.  Overheads increase due to labour, machinery, fuel and general overhead cost inflation.  Some costs have increased to deliver the SFI options that the farm has signed-up for.   The key issue for the coming harvest is output though.  Despite the reduced UK harvest crop prices are un-exciting for growers – largely due to plentiful grain stocks  around the world.  Yields are also forecast to be lower.  Loam Farm is assumed to have established its winter crops, but the forecast yield has been reduced due to crop stress over winter and the significant bare patches in fields.  The farm has around a third spring cropping.  Again, these crops are assumed to have been established but the expected yield has been cut due to the late planting and unfavourable soil conditions.  It can be seen that, for Loam Farm, this means there is a forecast loss from production for this harvest.  The (declining) BPS and SFI are required to bring the business back into profit.

If you would like more detail on the topics covered above as well as additional articles on UK farm business matters, why not subscribe to our Professional Update bulletin? Over the course of each month, we give a concise and unbiased commentary on the key issues affecting business performance in the UK agri-food industry, and its implications for farming and food businesses. Please click on the link below for a 90-day free trial.

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Beef and Lamb Markets Update

Beef

Cattle prices remain strong but fell back throughout March and are just below 2023 levels.  However, prices appear to be stabilising now.  The GB deadweight prime all steer price for the week ending 13th April 2024 stood at 487.5p per kg; compared with 490.8 p per kg for the same week in 2024.  The cull cow price has climbed steadily since the turn of the year, from 316.9p per kg at the start of 2024 to 356p per kg for the week ending 13th April.  Even so, it is still some 27p per kg below last year’s record levels.  GB slaughterings are estimated to be up on the year, with prime supplies seeing a 2.7% (13,100 head) growth on the year-to-date.  But prices are being supported by demand, which is reported to be good ahead of the summer BBQ season.  Furthermore, Irish cattle prices have been trending up over recent weeks due to firm demand adding further support to GB beef values.

Sheep

The GB sheep market has experienced some exceptional prices over the spring.  Following a slight dip a couple of weeks ago, prices have increased again; the GB deadweight SQQ overall price for the week ending 13th April rose by 21p per kg on the week to 850.7p per kg, compared with 636.3p per kg in 2023.  Prices have remained strong post-Easter supported by tight supplies.  The AHDB estimates slaughterings to be down by 7.6% (238,000 head) for the year-to-date.  The wet weather is also impacting finishing of hoggs and will mean spring lambs are likely to take longer to come to market.

Looking ahead, the AHDB has updated its domestic sheep meat production for the year.  It is now estimating supplies to fall by -1.4% to 282,000 tonnes (previously -1%).  The update follows the lastest livestock numbers from Defra, which reports a larger decline in the breeding flock.  In turn, the lamb crop, which was previously forecast to increase by 2%, is now expected to decline by -1.2% compared with last season and this doesn’t take into account any impacts from Schmallenberg or Bluetongue virus.

However, the carryover of old season lambs from 2023 to 2024, although still down on the year, is not expected to drop by as much; the fall in carry-over is now estimated at -4.3%, compared with the previous figure of -10%.  This is due to the assumption that more ewe lambs, previously expected to go into the breeding flock, will be slaughtered.  In terms of new season lamb slaughterings in the first six months of the year, this is now expected to be around 1.57m head (previously 1.6m).  Slaughter in the second half of the year assumes a typical pattern and is forecast to be 6.4m head (previously 6.6m); growth of just under 1% compared with the same period in 2023.  Adult sheep slaughterings across the year are forecast to fall by -3%.  The revised forecast show supplies tightening and whereas, previously, the increase in product in the second half of the year could have put downward pressure on prices, this has reduced.  The main concern for the sector will be from reduced consumer demand because of a switch to cheaper meats.

If you would like more detail on the topics covered above as well as additional articles on UK farm business matters, why not subscribe to our Professional Update bulletin? Over the course of each month, we give a concise and unbiased commentary on the key issues affecting business performance in the UK agri-food industry, and its implications for farming and food businesses. Please click on the link below for a 90-day free trial.

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Farming Focus – April 2024

In the April 2024 edition of Farming Focus see which SFI Actions Defra has placed an area limit on.  Farmers in England do not have to apply for the BPS this year, but do not forget ES and CS revenue claims.  Elsewhere in the UK the usual 15th May deadline remains for BPS/SAF applications.  We remind English farmers that all strands of the equipment and technology grants are now open and that hedgerow protection remains the same under new legislation now cross compliance has gone.  We also give a summary of agricultural rents in England and report on the cabinet reshuffle in Wales.  A reminder that the UK Minimum Wages rise as from 1st April and report that Red Tractor has officially announced the Greener Farms Commitment module has been dropped.

The Spotlight article this month takes a look at Defra’s latest Farm Business Income (FBI) figures by farm type. There have been some big drops for Cereals, General Cropping and Dairy Farms.

Click Here to access our April 2024 edition of Farming Focus.

If you require advice from one of our consultants, do not hesitate to contact them by email or phone.  Their contact details can be obtained by clicking here. Alternatively, your can also contact our office on 01664 503200 or email [email protected]

If you would like more detail on the topics covered above as well as additional articles on UK farm business matters, why not subscribe to our Professional Update bulletin? Over the course of each month, we give a concise and unbiased commentary on the key issues affecting business performance in the UK agri-food industry, and its implications for farming and food businesses. Please click on the link below for a 90-day free trial:

https://theandersonscentre.co.uk/publications/abc-professional-update/

Farming Focus – March 2024

In the March 2024 edition of Farming Focus we take at look at Rishi Sunak’s announcements at the NFU Conference, including a doubling of the SFI Management Payment.  We notify readers that it is now possible to transfer delinked (BPS) payments if necessary.  We also discuss the latest profitability figures for our Friesian Farm model.  In Wales the Woodland Creation grant is now open until November, have a look to see the application windows for other Welsh schemes.  Finally we remind English farmers that the Improving Farm Productivity Grant is open until 21st March; please contact one of our consultants if you require any help in apply for this grant.

The Spotlight article this month takes a look at the Farming Equipment and Technology Fund (FETF) which is expected to open shortly.  The guidance is already available and we provide links to the equipment (including new items) which are available under three themes in this Round.

Click Here to access our March 2024 edition of Farming Focus.

If you require advice from one of our consultants, do not hesitate to contact them by email or phone.  Their contact details can be obtained by clicking here. Alternatively, your can also contact our office on 01664 503200 or email [email protected]

If you would like more detail on the topics covered above as well as additional articles on UK farm business matters, why not subscribe to our Professional Update bulletin? Over the course of each month, we give a concise and unbiased commentary on the key issues affecting business performance in the UK agri-food industry, and its implications for farming and food businesses. Please click on the link below for a 90-day free trial:

https://theandersonscentre.co.uk/publications/abc-professional-update/

Farming Focus – February 2024

In the February 2024 edition of Farming Focus we notify readers that the Improving Farm Productivity grant, including solar is now open in England.  We confirm BNG rules are required from 12th February and also take a look at what is happening regarding Nutrient Neutrality.  Frustrated waiting for RPA to make changes to your land parcels? Read how a new online system is set to speed the process up.  Welsh organic farmers will be pleased to read of support available this year.  Have your say on free-range egg legislation, the Government is consulting on rules surrounding mandatory housing and egg labelling.  We also report that the long awaited Statutory Instrument (SI) on milk contracts will be laid before parliament in February and that there has finally been an agreement over the sugar beet contract for the 2024 crop.  And remaining with sugar beet, Defra has confirmed emergency use of a neonicotinoid seed treatment will be allowed if thresholds of virus yellows are reached.

The Spotlight article this month takes a look at our Meadow Farm model.  Meadow Farm is a mixed family farm, typical of many across the country, but it struggles to make a profit without the help of the BPS.  See how we have retsructured Meadow Farm to make it more sustainable for the future.

Click Here to access our February 2024 edition of Farming Focus.

If you require advice from one of our consultants, do not hesitate to contact them by email or phone.  Their contact details can be obtained by clicking here. Alternatively, your can also contact our office on 01664 503200 or email [email protected]

If you would like more detail on the topics covered above as well as additional articles on UK farm business matters, why not subscribe to our Professional Update bulletin? Over the course of each month, we give a concise and unbiased commentary on the key issues affecting business performance in the UK agri-food industry, and its implications for farming and food businesses. Please click on the link below for a 90-day free trial:

https://theandersonscentre.co.uk/publications/abc-professional-update/

Farming Focus – January 2024

In the January 2024 edition of Farming Focus we notify readers that grants for Improving Farm Productivity, including solar are due to open in January in England.  We confirm the sugar beet price contract for 2024 has (finally) been agreed and report on the BPS 2023 rates for English claimants.  Also in England, the cross-compliance rules ended on 31st December 2023 – What does this mean for you?  In Wales the second stage of the Enhanced Nutrient Management approach has been laid before the Senedd, read what this means for Welsh farmers.  Are you reliant on migrant workers?  What could the proposed changes to immigration rules mean for your business?  Finally, read about the Government’s announcements on ‘Protected Landscapes‘ including a name change for ANOBs and another round of the NEIRF now being open.

We have two Spotlight articles this month.  The first one looks at more details on the proposed Sustainble Farming Scheme (SFS) which the Welsh Government is now consulting on and the second Spotlight article focuses on the recent annoucement by Defra on a combined SFI/CS offering from summer 2024.

Click Here to access our January 2024 edition of Farming Focus.

If you require advice from one of our consultants, do not hesitate to contact them by email or phone.  Their contact details can be obtained by clicking here. Alternatively, your can also contact our office on 01664 503200 or email [email protected]

If you would like more detail on the topics covered above as well as additional articles on UK farm business matters, why not subscribe to our Professional Update bulletin? Over the course of each month, we give a concise and unbiased commentary on the key issues affecting business performance in the UK agri-food industry, and its implications for farming and food businesses. Please click on the link below for a 90-day free trial:

https://theandersonscentre.co.uk/publications/abc-professional-update/

Farming Focus – December 2023

In the December 2023 edition of Farming Focus we take a look at the latest Farm Business Income figures for England covering 2022/23 and how the first couple of months of the Sustainable Farming Incentive (SFI) scheme have gone.  Defra has also announced that the Slurry Infrastructure Grant Online Checker is now open; get in touch if you require advice on applying.  For farmers in Wales we have included advanced notice of the application dates for various grants available for the industry.  We finish this edition with news that the EU has re-approved the authorisation of Glyphosate and what this could mean for UK farmers.

The Spotlight article this month focuses on Delinked BPS Payments and what this means for businesses.

Click Here to access our December 2023 edition of Farming Focus.

If you require advice from one of our consultants, do not hesitate to contact them by email or phone.  Their contact details can be obtained by clicking here. Alternatively, your can also contact our office on 01664 503200 or email [email protected]

If you would like more detail on the topics covered above as well as additional articles on UK farm business matters, why not subscribe to our Professional Update bulletin? Over the course of each month, we give a concise and unbiased commentary on the key issues affecting business performance in the UK agri-food industry, and its implications for farming and food businesses. Please click on the link below for a 90-day free trial:

https://theandersonscentre.co.uk/publications/abc-professional-update/

Farming Focus – November 2023

In the November 2023 edition of Farming Focus we update readers on the SFI – there is no requirement to send in an EoI now.  Please contact one of our consultants if you would like help in submitting an application; payments are already being received under SFI 2023.  All SFI 2022 agreement holders have been notified of termination, please get in touch if you want to switch to SFI 2023.  Do you want to collaborate with other farmers to improve the environment, if so, read about a further round of the CS Facilitation Fund just opened.  Is your HLS due to expire in 2024?  You may be offered a further 4-year extension.  We include notice of proposals from the AHDB to increase Levy rates.  We report on Welsh advanced BPS payments and also on the disappointing news that no agricultural trades have been included on the latest Shortage Occupation List.  Read about legislation to ensure imports of seeds and sprays from the EU can continue and the lack of agreement on the beet price for the 2024 crop.  Finally have your say on changes to the Cattle Tracing System (CTS), a consultation is now open.

The Spotlight article this month reports on the Slurry Infrastructure Grant which is opening for Round 2 sometime this month (November).  Guidance is already available and there have been some changes since Round 1.

Click Here to access our November 2023 edition of Farming Focus.

If you require advice from one of our consultants, do not hesitate to contact them by email or phone.  Their contact details can be obtained by clicking here. Alternatively, your can also contact our office on 01664 503200 or email [email protected]

If you would like more detail on the topics covered above as well as additional articles on UK farm business matters, why not subscribe to our Professional Update bulletin? Over the course of each month, we give a concise and unbiased commentary on the key issues affecting business performance in the UK agri-food industry, and its implications for farming and food businesses. Please click on the link below for a 90-day free trial:

https://theandersonscentre.co.uk/publications/abc-professional-update/