For those farming less than 200 acres.

[DrWazzock]

I've just been looking at;

https://nt.global.ssl.fastly.net/documents/hill-farm-profitability-report-pdf.pdf

The conclusions are quite interesting

6. Conclusions

The results of applying the Nethergill approach to the farm accounts of 46 farms in upland and marginal areas have shown that expanding flock and herd sizes in the uplands to overcome disadvantages of latitude, elevation and precipitation is economically damaging as well as damaging for the environment. The nature of non-linear variable costs implies that future success will not come from chasing volume growth alone. In fact, once the locally available grass (essentially at free-issue cost) has run out the farming activity becomes less profitable with expansion. Therefore, pursuing a business model that is solely production based – assuming increased profitability will ensue from increased volume of output – is not economically sustainable. The findings from this analysis challenge the received wisdom that greater profitability can be achieved from increasing production as a result of economies of scale. Instead, the results should help farmers focus on adjusting their management towards activities that would achieve greatest profit margin. If this is done, the analysis shows that this would lead many upland farmers to adjust their stocking levels downwards. In turn, where over-grazing is an issue, this in turn will have knock on environmental benefits by reducing some of the environmental pressure on the land. The analysis has also shown that, when public support payments are taken out of the revenue line, for some farms reducing stocking levels to the MSO reduces financial losses, but it does not take them into profit. The current system of support has hidden the true financial situation of the agricultural activities taking place on upland farms and has provided a safety net that has meant that insufficient attention has often been paid to the underlying profitability of their operations. This highlights the importance for farmers to review their farm accounts in detail and proactively engage in business planning to find ways to improve their long-term viability. This is especially important now in order to prepare for the introduction of new systems of public support to agriculture in the UK, particularly the planned removal of direct payments in England and Wales. By looking in detail at the accounts of the agricultural part of the business for this selection of upland farms, it has also become clear that the level of fixed costs is unsustainable, particularly looking ahead to a situation without direct payments. Not all fixed costs identified were essential to the farm operation or being used as efficiently as they could be, and this suggests that urgent attention is required to reduce these as far as possible as another means of boosting profit margins (or reducing losses). There are a number of options to address this. Where the agricultural enterprise is or becomes one of a portfolio of businesses on the farm, fixed costs can be spread between the businesses, however in other cases, a more collaborative and cooperative approach to managing multiple farms’ resources may provide a solution. Focussing on these types of solutions may help maintain many of the small to medium sized family farms that are under pressure financially and yet form an important element of local communities. Given the reduced pressure on the environment that would be brought about by reducing stocking levels to the MSO, this also provides farmers with opportunities to benefit from increased income associated with the delivery of environmental outcomes. This could be through changing their focus and purpose towards producing meat as a means of delivering environmental outcomes, resulting in a focus on producing high quality meat products, using their environmental credentialsto achieve a price premium. In addition, there will be opportunities to take greater advantage of public payments for delivering environmental and climate benefits that are valued by society. 23 However, it should also be recognised that in some upland situations, under-grazing is increasingly becoming an issue from an environmental perspective, particularly on areas of land that are more difficult to access and manage. In these cases, for environmental purposes an increase in stocking levels would be required, to bring levels up to the MSO level. In other situations, there may be a need to maintain stocking output levels above the MSO level to manage a particular habitat to achieve an identified environmental outcome (e.g. increase populations of breeding waders). In these cases, payments to farmers to deliver these outcomes will also be required, either to increase stocking levels to the MSO level or maintain them above. It may be that, as agricultural support systems change in coming years, if reducing fixed costs and increasing income cannot deliver the necessary profit margins, that some restructuring may take place, with larger farm units, managed by fewer farmers, a trend which has been taking place for many years already. However, improved business planning and taking advantage of the options above should help avoid this wherever possible. Key will be to find a way that this can happen without damaging the environment or losing the character of the countryside or local communities that are an important part of our natural and cultural heritage. This transition to a new business model for upland farming will not take place overnight nor without additional support for farmers and crofters such as through enhanced advice, training and knowledge transfer initiatives. It is also clear that there will remain situations where the economics of running an upland farm cannot be made to work. In these cases, decisions will have to be made about what course of action to take. For smaller enterprises, developing a portfolio of revenue streams is likely to be the future, whereas larger farms may be able to justify focussing on farming alone. It would be interesting to apply this approach to other farming systems in the UK, such as lowland grazing and arable systems, as initial analysis suggests that similar results may be found.


Some of the key messages that flow from this analysis are as follows:

• Hill farms and those in other marginal areas face economic challenges but they could improve their own business performance without recourse to financial support by reducing stocking levels. This requires the farm business model to shift from a focus on production to a focus on profit margins.

• Moving stocking levels to MSO levels, i.e. those that can be achieved on the naturally available grass, without requiring additional inputs, is also generally beneficial for the environment. By improving the condition of a farm’s natural assets this in turn should improve the flow of ecosystem services, such as clean water or reduced flood risk.

• Alongside reducing stocking levels, reducing fixed costs and increasing income from farming activities are important components of improving profit margin. Making farm assets work harder, for example through greater collaboration and cooperation between farmers, as well as adding value to meat products andmarketing on the basis of its environmental credentials, are examples of opportunities to which farms operating in upland and marginal areas could give greater consideration.

• To inform such decisions, business planning is critical. This allowsthe underlying profitability of the farming part of the business to be understood before income from financial support and other sources is taken into account, which in turn can inform decisions to be made about the 24 course of action to take to assure the long-term viability of the business. Farming activities can be one of a portfolio of businesses operating on or from the farm, but it is important that the economic viability of each of these is understood.

• Reversing the environmental declines in upland and marginal farming areas requires more than simply adjusting stocking levels. In some cases, under-grazing is the issue and stocking levels require increasing and in others stocking levels above the MSO may be required to achieve specific outcomes. The approach therefore has relevance to public policy in demonstrating that in some cases, payments may be required to cover these additional costs for the delivery of public goods.

• Finally, these findings suggest that in these upland and marginal situations, a shift in mindset away from the production of meat as a commodity towards grazing livestock to produce environmental benefits can actually improve the economic resilience of the business and help assure the long-term economic viability of these farming systems.

That does kind of make sense, but profitability with reduced numbers would depend on the size of payments for resulting environmental benefits and how such benefits are measured. And as you say generally we would already be taking steps to farm more profitability if that was possible.
What I have noticed though in the case of my Scottish uncle, and why that report chimes a chord, was that he never intensified in the same way as his neighbours did into intensive grassland and dairy with high inputs. They intensified so much that the vast quantities of slurry they produced tainted the spring that fed his house. Yet everybody there who went down that intensive route ended up amalgamated into on super large dairy farm and have now gone, yet his family carries on quite happily now with low intensity beef and sheep on 99 acres. They have other jobs but still return quite a reasonable farming profit in an environmentally benign and sustainable way.

 

[Jackov Altraids]

That does kind of make sense, but profitability with reduced numbers would depend on the size of payments for resulting environmental benefits and how such benefits are measured. And as you say generally we would already be taking steps to farm more profitability if that was possible.
What I have noticed though in the case of my Scottish uncle, and why that report chimes a chord, was that he never intensified in the same way as his neighbours did into intensive grassland and dairy with high inputs. They intensified so much that the vast quantities of slurry they produced tainted the spring that fed his house. Yet everybody there who went down that intensive route ended up amalgamated into on super large dairy farm and have now gone, yet his family carries on quite happily now with low intensity beef and sheep on 99 acres. They have other jobs but still return quite a reasonable farming profit in an environmentally benign and sustainable way.

It does make some sense.
Why ELMS is not being designed with this in mind does not make sense.

I wasn't hugely convinced by @delilah 's proposal to put a basic level of payment on the first X ha's of PP, but this does really support that idea.

 

[Henarar]

But the major flaw with landscape recovery is, recovered to what?

In most cases, a woodland/ forest is the final result of no intervention.
It is the habitats that exist for brief periods during natural transition that are essential for different flora and fauna. These habitats will not persist without management.
This has been done by farmers, for free, for millennia.

If you mean no human intervention then I think its a bit late for that, we have intervened already, don't think everyone that lives on this little island would be best chuffed with the no intervention bit as it would mean going somewhere else

 

[DrWazzock]

But the major flaw with landscape recovery is, recovered to what?

In most cases, a woodland/ forest is the final result of no intervention.
It is the habitats that exist for brief periods during natural transition that are essential for different flora and fauna. These habitats will not persist without management.
This has been done by farmers, for free, for millennia.

If we upped sticks here tomorrow and closed the gate and nobody touched the place, it would be very interesting to see what happened. There would still be deer and rabbits grazing. I’d say it would be a couple of hundred years before it was anything like woodland. The field across the road from us is still a wide expanse of tussocky grass with slowly enlarging clumps of trees and shrubbery after 40 years of being left alone. It’s wet acid sand though so maybe not typical.

 

[DrWazzock]

I agree though there isn’t that much diversity in dense oak woodkand. You need a mix of different habitats. That could well happen naturally due to topography, soil type , altitude etc.
That doesn’t mean the farmed environment is any less beneficial but it can be a bit one dimensional depending on management. Silage fields mowed in May are arguably a much poorer habitat for nesting birds than my beet field harvested in November.

 

[Jackov Altraids]

If you mean no human intervention then I think its a bit late for that, we have intervened already, don't think everyone that lives on this little island would be best chuffed with the no intervention bit as it would mean going somewhere else

I was thinking more along the lines that planting trees is a complete nonsense when it is something of a 'default' habitat which would probably happen eventually anyway [without human intervention] but wouldn't be anything like as rich a habitat as some of those it would be while naturally transitioning.

 

[primmiemoo]

 

[Jackov Altraids]

I agree though there isn’t that much diversity in dense oak woodkand. You need a mix of different habitats. That could well happen naturally due to topography, soil type , altitude etc.
That doesn’t mean the farmed environment is any less beneficial but it can be a bit one dimensional depending on management. Silage fields mowed in May are arguably a much poorer habitat for nesting birds than my beet field harvested in November.

Which is another of the massively overlooked matters with regard to ELMS, scale.

It doesn't really matter what you do with a patchwork of 5 acre fields as nature will always have somewhere.
Vast plains all processed at the same time eradicate almost everything.

 

[delilah]

I've just been looking at;

https://nt.global.ssl.fastly.net/documents/hill-farm-profitability-report-pdf.pdf

The conclusions are quite interesting

6. Conclusions

The results of applying the Nethergill approach to the farm accounts of 46 farms in upland and marginal areas have shown that expanding flock and herd sizes in the uplands to overcome disadvantages of latitude, elevation and precipitation is economically damaging as well as damaging for the environment. The nature of non-linear variable costs implies that future success will not come from chasing volume growth alone. In fact, once the locally available grass (essentially at free-issue cost) has run out the farming activity becomes less profitable with expansion. Therefore, pursuing a business model that is solely production based – assuming increased profitability will ensue from increased volume of output – is not economically sustainable. The findings from this analysis challenge the received wisdom that greater profitability can be achieved from increasing production as a result of economies of scale. Instead, the results should help farmers focus on adjusting their management towards activities that would achieve greatest profit margin. If this is done, the analysis shows that this would lead many upland farmers to adjust their stocking levels downwards. In turn, where over-grazing is an issue, this in turn will have knock on environmental benefits by reducing some of the environmental pressure on the land. The analysis has also shown that, when public support payments are taken out of the revenue line, for some farms reducing stocking levels to the MSO reduces financial losses, but it does not take them into profit. The current system of support has hidden the true financial situation of the agricultural activities taking place on upland farms and has provided a safety net that has meant that insufficient attention has often been paid to the underlying profitability of their operations. This highlights the importance for farmers to review their farm accounts in detail and proactively engage in business planning to find ways to improve their long-term viability. This is especially important now in order to prepare for the introduction of new systems of public support to agriculture in the UK, particularly the planned removal of direct payments in England and Wales. By looking in detail at the accounts of the agricultural part of the business for this selection of upland farms, it has also become clear that the level of fixed costs is unsustainable, particularly looking ahead to a situation without direct payments. Not all fixed costs identified were essential to the farm operation or being used as efficiently as they could be, and this suggests that urgent attention is required to reduce these as far as possible as another means of boosting profit margins (or reducing losses). There are a number of options to address this. Where the agricultural enterprise is or becomes one of a portfolio of businesses on the farm, fixed costs can be spread between the businesses, however in other cases, a more collaborative and cooperative approach to managing multiple farms’ resources may provide a solution. Focussing on these types of solutions may help maintain many of the small to medium sized family farms that are under pressure financially and yet form an important element of local communities. Given the reduced pressure on the environment that would be brought about by reducing stocking levels to the MSO, this also provides farmers with opportunities to benefit from increased income associated with the delivery of environmental outcomes. This could be through changing their focus and purpose towards producing meat as a means of delivering environmental outcomes, resulting in a focus on producing high quality meat products, using their environmental credentialsto achieve a price premium. In addition, there will be opportunities to take greater advantage of public payments for delivering environmental and climate benefits that are valued by society. 23 However, it should also be recognised that in some upland situations, under-grazing is increasingly becoming an issue from an environmental perspective, particularly on areas of land that are more difficult to access and manage. In these cases, for environmental purposes an increase in stocking levels would be required, to bring levels up to the MSO level. In other situations, there may be a need to maintain stocking output levels above the MSO level to manage a particular habitat to achieve an identified environmental outcome (e.g. increase populations of breeding waders). In these cases, payments to farmers to deliver these outcomes will also be required, either to increase stocking levels to the MSO level or maintain them above. It may be that, as agricultural support systems change in coming years, if reducing fixed costs and increasing income cannot deliver the necessary profit margins, that some restructuring may take place, with larger farm units, managed by fewer farmers, a trend which has been taking place for many years already. However, improved business planning and taking advantage of the options above should help avoid this wherever possible. Key will be to find a way that this can happen without damaging the environment or losing the character of the countryside or local communities that are an important part of our natural and cultural heritage. This transition to a new business model for upland farming will not take place overnight nor without additional support for farmers and crofters such as through enhanced advice, training and knowledge transfer initiatives. It is also clear that there will remain situations where the economics of running an upland farm cannot be made to work. In these cases, decisions will have to be made about what course of action to take. For smaller enterprises, developing a portfolio of revenue streams is likely to be the future, whereas larger farms may be able to justify focussing on farming alone. It would be interesting to apply this approach to other farming systems in the UK, such as lowland grazing and arable systems, as initial analysis suggests that similar results may be found.


Some of the key messages that flow from this analysis are as follows:

• Hill farms and those in other marginal areas face economic challenges but they could improve their own business performance without recourse to financial support by reducing stocking levels. This requires the farm business model to shift from a focus on production to a focus on profit margins.

• Moving stocking levels to MSO levels, i.e. those that can be achieved on the naturally available grass, without requiring additional inputs, is also generally beneficial for the environment. By improving the condition of a farm’s natural assets this in turn should improve the flow of ecosystem services, such as clean water or reduced flood risk.

• Alongside reducing stocking levels, reducing fixed costs and increasing income from farming activities are important components of improving profit margin. Making farm assets work harder, for example through greater collaboration and cooperation between farmers, as well as adding value to meat products andmarketing on the basis of its environmental credentials, are examples of opportunities to which farms operating in upland and marginal areas could give greater consideration.

• To inform such decisions, business planning is critical. This allowsthe underlying profitability of the farming part of the business to be understood before income from financial support and other sources is taken into account, which in turn can inform decisions to be made about the 24 course of action to take to assure the long-term viability of the business. Farming activities can be one of a portfolio of businesses operating on or from the farm, but it is important that the economic viability of each of these is understood.

• Reversing the environmental declines in upland and marginal farming areas requires more than simply adjusting stocking levels. In some cases, under-grazing is the issue and stocking levels require increasing and in others stocking levels above the MSO may be required to achieve specific outcomes. The approach therefore has relevance to public policy in demonstrating that in some cases, payments may be required to cover these additional costs for the delivery of public goods.

• Finally, these findings suggest that in these upland and marginal situations, a shift in mindset away from the production of meat as a commodity towards grazing livestock to produce environmental benefits can actually improve the economic resilience of the business and help assure the long-term economic viability of these farming systems.

@Janet Hughes Defra

To paraphrase: All area based payments should go to PP. It is the only area payment that will achieve all of the objectives that you yourself have said ELMS should be judged by: high participation, clear objectives, quantifiable results, reward of existing good practice, avoidance of prescriptive measures.

 

[Henarar]

I was thinking more along the lines that planting trees is a complete nonsense when it is something of a 'default' habitat which would probably happen eventually anyway [without human intervention] but wouldn't be anything like as rich a habitat as some of those it would be while naturally transitioning.

Wasn't much of the countryside grassland and kept like that by large (and dangerous) ruminants, as I said its to late to have true rewilding (as in no people) because with all the people you can't get the scale.
Probably best to just have some nice quite cows and sheep to do the grazing of the wild PP.
perhaps @delilah is right.

And as for the term natural most people seem to think that is something that happens without people but I think we are part of nature and so is everything we do, for instance its as much natural for us to build a house to raise our kids in as it is for a bird to build a nest, so if you want natural then thats how it is now. Jobs a good un

 

[DrWazzock]

Wasn't much of the countryside grassland and kept like that by large (and dangerous) ruminants, as I said its to late to have true rewilding (as in no people) because with all the people you can't get the scale.
Probably best to just have some nice quite cows and sheep to do the grazing of the wild PP.
perhaps @delilah is right.

And as for the term natural most people seem to think that is something that happens without people but I think we are part of nature and so is everything we do, for instance its as much natural for us to build a house to raise our kids in as it is for a bird to build a nest, so if you want natural then thats how it is now. Jobs a good un

We even have "house" mice and "house" flies here that have adapted to living in our man made "nests". Bats as well.

 

[DrWazzock]

I don't really know what the answer is to all this, but for one thing I don't think that spending a million quid here to recreate heathland by the efforts of man and machine would be value for money when it could recreate itself for free if left for a couple of hundred years and as said above would provide quite a variety of habitats as it transformed over those years.
Whole thing needs a rethink in my view. For LR it probably be better for the government or conservation bodies to buy up (not compulsory) poorer farmland as did the Forestry Commission did after the war here. They paid 35p an acre for 2000 acres next to us in 1953 and the sellers were glad of it at the time considering the land it was.
I'd agree with subsidising PP as natural reserve of OM and a good way of keeping land in standby mode.
The rest? Well what's wrong with CS as it stands? Perhaps tweak it and enhance it a bit. 12 -24 m grass buffer strip option alongside any watercourse would be good. Ramp down BPS.
Leave it at that. Jobs a good un.

 

[primmiemoo]

We even have "house" mice and "house" flies here that have adapted to living in our man made "nests". Bats as well.

Some of us have our own, carefully selected and nurtured strains of house spiders, too

 

[scavinge]

Purely for those farming less than 200 acres * please :

1) Have you been invited to be a pilot for the SFI ? Will you be taking up the invitation ?
2) How important are current BPS payments to your business ?
3) From what you know to date, do you see the SFI as being of relevance to your business ?
4) If it's not too intrusive, where do you see your farming business being in 5 years time ?

* Average farm size in England.

Thought I would kick start this thread again as I found it good reading.

1) no and no
2) Its our wages, 90% taken out as drawings the same week it is paid in
3) I am trying to find way of making it work but have failed so far.
4) Going to diversify (work in progress), in 5 years one of us will have a state pension, may contract out fully then.

Owner occupier arable with two partners.

 

[delilah]

 

[delilah]

Interested to know which of the standards launched yesterday those farming less than 200 acres will be applying to ? Which ones; the arable/ grassland/ both ?

 

[Treg]

Grassland soil intermediate if allowed, already got a CS Grassland Organic so need to ring up and see if I can do both.
It pays alot more than the Organic CS .

 

[delilah]

Bump.

Anyone on here farming less than 200 acres feeling confident about their future ? Because from what I have read today @Janet Hughes Defra wants rid of you.

 

[Still Farming]

Bump.

Anyone on here farming less than 200 acres feeling confident about their future ? Because from what I have read today @Janet Hughes Defra wants rid of you.

Good job we are in Wales then?

 

[topground]

Bump.

Anyone on here farming less than 200 acres feeling confident about their future ? Because from what I have read today @Janet Hughes Defra wants rid of you.

Looking forward to asking the RPA why they are contacting me since I am not signed up for SFI or CS.