New Income Streams for Farmers

The Government has announced that the current Basic Payment scheme will end in 2028. The proposal for an enhanced Environmental Stewardship Scheme, in the form of Environmental Land Management (ELMS), is still some way off. With wide scale trials in 2024 and a full roll out in 2026, it will mean that that many farms will find themselves seriously worse off for a number of years which must not be ignored.

The wider advantages of land ownership and occupancy have tended to be overlooked by farmers who have concentrated on producing food and livestock. However, the possibility to add income streams either on top of or beside the existing farming operations should not be overlooked. Farms already have stewardship schemes and these forms of Government support will continue at a fairly low level.

The opportunities that exist for farms to build on the core farming income streams have already been seen for some farms with solar and anaerobic digestion. We are now starting to see farmers benefiting from carbon sequestration with Forestry Commissions Woodland Carbon Guarantee Scheme which is offering payment for Woodland Carbon Units (WCUs), up to 35 years.

Developers are starting to have to ensure that their developments do not cause a net loss of biodiversity and in fact have a net benefit with the creation of a trading system in Conservation Credits. These can offer long term payments (40 years) to farmers where verifiable conservation schemes are put in place.

Downland and species rich permanent pasture could be a source of conservation credits to help farmers income

These conservation agreements are the first form of corporate offsetting and we will see more of this as companies start to realise their social responsibilities and move into paying for ecosystem services. Several water companies are already paying for cover crops to reduce pollution and improve water quality, as they have realised that prevention is much cheaper than curing the problem.

Flood alleviation could be a major element of future land management agreements

Land does not just provide a single ecosystem service in providing cleaner water. A more cost-effective way may involve wetland creation, which may in turn help mitigate downstream flooding, also providing species rich habitat and a place for public access. These wider benefits might be funded by conservation credits or carbon offsetting credit schemes. This is why stacking revenue streams is important to adding value to basic income streams.

Soils and water are likely to be part of eco system services that can be provided by farmers, whether it be in the form of flood alleviation or carbon sequestration. One of the key problems for many farms is that their farms are relatively small in area and their individual impact is diminished. The greater benefits to both the farmer and the company will only be achieved if the scheme has the necessary scale and this is likely to require neighbouring farmers to work together.

The emphasis of the new ELMS scheme is around reducing the loss of biodiversity and enhancing habitats. Unlike previous schemes, which have been focused on the individual farm, much of the emphasis in the ELMS is going to be groups of farms and at a landscape level.

The ability to work at a landscape scale will be important if farmers and land-owners are going access the full range of income streams in the future

As can be seen in the above, if farmers and land-owners are to benefit from these schemes they will almost certainly need to collaborate with neighbours to provide the scale needed. For membership of Tiers 2 and 3 of the ELMS scheme, conservation or carbon credits and especially for some of the items that enable income streams need to be stacked.

The Facilitation Fund under Countryside Stewardships has been developed from the initial Farmer Cluster Groups. These have proved a successful way of farmers working together towards a range of agreed objectives and environmental targets. These farmer led groups can be funded by the Facilitation Fund or privately with funding being used for the services of the groups facilitator. There are already over 100 landscape groups across England Scotland and Wales with over 500,000 Ha of land being managed in these groups.

If you want to know more about benefiting from these new opportunities or how to set up a Farmer Cluster Group, contact William at w.waterfield@fcgagric.com or your local FCG office.

Posted in Andover, Arable & Crops, Business Management, Dairy & Forage, Environment, Grant Funding.