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GSC Grays, the rural land and property specialists, believe some farms could be better off under the Sustainable Farming Incentive (SFI) scheme and could justify a transition to regenerative farming.
Through the SFI, farmers will be paid to produce food in an environmentally sustainable manner. By using a theoretical model farm, and applying all options that will be available in summer 2023, GSC Grays experts have calculated SFI payments could exceed historic Basic Payment Scheme (BPS) payments (£232.22/ha in 2020).
However, to achieve this, the business must already manage the land within a regenerative system or be prepared to make the necessary investments and changes to their farming operations.
This will include incorporating cover crops and companion crops within arable rotations, widespread use of legumes within improved grassland, not applying insecticides, investment in precision farming equipment, adoption of a no-till system and establishment of environmental buffer strips and plots. Significantly, payment rates per hectare will vary according to the farm size and larger farms would see some payments diluted by virtue of their scale.
On February 3rd, DEFRA announced 6 additional standards for the Sustainable Farming Incentive and provided an indication of payment rates for a further 4 standards available in summer 2023. GSC Grays has put together a table showing what this means in practice for a 200 ha mixed farm comprising of 100 ha of arable land, 70 ha of improved grassland and 30 ha of unimproved grassland with an extensive application of the SFI Standards, assuming options are maximised where possible.
It should be noted that ‘Avg. Payment’ rates for some Standards will vary by farm. Standards combine a variety of payment rates and ambition levels, resulting in varying averages. Furthermore, there are still grey areas within the SFI guidance such as the requirements and confirmed payment rates of the standards to be released this summer.
Jamie Charlton, GSC Grays farm business consultant, said: “Up to now, the payment rates released by DEFRA to encourage the transition to a regenerative farming model have not provided sufficient financial incentive to justify making the switch.
“We expect to see an increase in businesses questioning whether their current farming system is the most profitable and sustainable within the new support payment structure. We would stress that the cost of applying these transitions will vary by farm. Nevertheless, costs must be evaluated against the possible cost-savings achieved such as reduced consumption of fuel and fertiliser as well as the benefits of improved soil health on factors such as water retention.”