Category: The Andersons Centre

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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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]

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Expanded Offer

Defra has released details of the expanded SFI 2024 offer.  In total there will be 102 actions available.  This will include the 23 existing actions (available now under SFI 2023), over 20 brand new actions and more than 50 actions which were previously available under Countryside Stewardship Mid Tier (CS MT).  With reference to the latter, a number of these actions have been simplified and reduced from 5 to 3 years, so that over 90 of the actions are for 3 years.  This has the aim of making the scheme more accessible to tenant farmers.  Our article of 8th January gave details of some of the new actions, which include support for precision farming, agroforestry, boundaries and an improved offer for upland farmers (see https://abcbooks.co.uk/elm-2024/).

All the actions will be merged into one scheme – called the Sustainable Farming Incentive (SFI) and they will be available via one application.  Defra has said ‘bringing the schemes into one place, with one name, means farmers can access the best of both offers, the flexibility of the SFI with the breadth, scale and ambition of CS MT, just with less paperwork’.  It is our understanding that going forward there will no longer be a CS Mid Tier; this has now been subsumed into the SFI.  We were expecting this to happen over time, but it has occured quicker than we thought.  CS Higher Tier will remain available – see below.  

Controlled Rollout

The expanded SFI will be offered via a ‘controlled rollout’.  Initially, the RPA will invite a mix of farm businesses who have submitted an Expression of Interest (EoI) in the expanded offer.  EoIs have now opened and can be made via https://defragroup.eu.qualtrics.com/jfe/form/SV_cSGsCBrA5Kim3H0  Invites from the RPA will start from the end of May.  This is to test the system before full rollout.  Applications will then open to the wider sector ‘based on eligibility’ (it’s not clear what that actually means) from 22nd July 2024.  We do however know, the expanded offer will be available to those who have not previously claimed the BPS for the first time.

The SFI cap, which was put in place in March 2024, will remain with a further four actions from the new expanded offering being added.  This means new SFI applications will only be able to put 25% of the total agricultural area of their farm into a combination of one or more of these 10 actions which include:

The original actions:

• IGL1 – Take improved grassland field corners or blocks out of management
• IGL2 – Winter bird food on improved grassland –
• AHL1 – Pollen and nectar flower mix
• AHL2 – Winter bird food on arable and horticultural land
• AHL3 – Grassy field corners and blocks
• IPM2 – Flower-rich grass margins, blocks, or in-field strips.

New actions similar in nature to the 6 above:

• WBD3 – in-field grass strips
• AHW9 – unharvested cereal headland
• AHW1 – bumblebird mix
• AHW11 – cultivated areas for arable plants

Full details on the expanded offer can be found via https://www.gov.uk/government/publications/sustainable-farming-incentive-scheme-expanded-offer-for-2024

Guidance on all the individual actions can be found on the new digital tool known as ‘find funding for land or farms’ https://www.gov.uk/find-funding-for-land-or-farms.  This is similar to the Countryside Stewardship Grants finder.  Whilst it was very nice to have a SFI ‘Handbook’ with all the actions in when there was only 23, this may not be practical now we have 102 actions.  One has not been published as yet.

Countryside Stewardship Higher Tier

More information will be available later in the summer for those interested in the CS Higher Tier, this will include:

• eligibility
• how to apply and request specialist advice
• details on each Higher Tier action

Higher Tier is being kept separate as these agreements are usually more complicated and require specialist advice from Natural England (NE) or the Forestry Commission (FC).  Later this summer applicants will be able to start working with NE or the FC to draw up their applications, with eligible farmers being able to submit applications online via Rural Payments during the ‘winter’ with the first agreements commencing in early 2023.  After this, applications will be possible all year round with agreements normally starting the month after applications are approved.

SFI 2023

The existing SFI 2023 scheme remains open, but it seems there will be a ‘downtime’.  Defra has said ‘you can apply for the SFI 2023 offer until access to the application servce is restricted, before the expanded SFI offer is launched in summer 2024’.  As all the actions that are in the 2023 offer will be carried forward into the 2024 offer, this will only really affect those that are in the middle of drawing up an agreement, we do however expect to be given warning before this happens, so this is just a ‘head’s-up’.

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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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Defra has announced funding for projects which will develop innovative solutions to farm nutrient management.  Through the Farming Innovation Programme, £15m will be available through two competition strands;

• Farming Futures: Nutrient Management Phase 1 – Feasibility – Funding for projects of between £200,000 to £500,000
• Farming Futures: Nutrient Management Phase 1 – Industrial Research – funding for projects of between £500,000 to £1,000,000

The Farming Innovation Programme, is a partnership with Innovate UK who are part of UK Research and Innovation (UKRI) – the UK’s innovation agency.  Innovate UK deliver the programme, providing funding to those who want to research or develop an innovative solution to a known problem in agriculture.  Funding is grouped under four different themes; this support is via the Farming Futures Research and Development (R & D) Fund which supports work on ‘longer-term’ innovations.  Both competitions will open on 29th May and close at 11am on 24th July, but further guidance has been made available in advance of opening and can be found via https://farminginnovation.ukri.org/

Further to these strands, Innovate UK will run an additional competition, Farming Futures: Nutrient Management Phase 2 – Industrial Research, in Autumn 2024.  This Phase 2 competition will have higher project costs that can be supported through the Phase 1 competition.

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