Payments from England's Sustainable Farming Incentive (SFI) are the difference between profit and loss for many farms, according to the latest forecasts from farm business consultant Andersons, reported by Farmers Weekly.

Andersons' Loam Farm model, 600 hectares of combinable crops in the east of England, is set to make a business surplus of just £40 per hectare from the 2026 harvest, and only after £122/ha of SFI income. Without it the business would lose £83/ha from farming, mainly because of higher fertiliser and fuel prices and overheads. It is the third poor season in a row, and the farm's 2027-28 budget depends on winning an SFI26 agreement when its current one expires this winter. "If the farm is not successful in its application ... then this would leave a large hole in Loam Farm's finances for 2027," said Richard King, head of business research at Andersons.

The mixed Meadow Farm model in the Midlands, with beef, sheep and arable, drops to a production margin of £95/ha this year, lifted to £276/ha by SFI and a small Basic Payment. The Friesian Farm dairy model, 225 cows on 135 hectares, faces a profit squeeze this year, with a cost of production of 46.5p a litre against milk output of 37.8p, though prices are recovering; low forage stocks are its biggest immediate worry.

Across the UK, Andersons estimates this year's drought will wipe £1bn to £1.5bn off Total Income from Farming, which it forecasts falling to about £6.1bn from a provisional £8.4bn in 2025, with recovery in 2027 only if the weather is kinder. King said machinery auctions show the sector restructuring, while many still bid rents that are unviable.

Policy adds uncertainty: SFI is likely to be time-limited and possibly unavailable after 2030, the government has committed to an SFI 2027 without details, and a possible SPS agreement with the EU in mid-2027 would bring both market access and new rules.

Photo: Hugh Venables / Wikimedia Commons (CC BY-SA 2.0)

Source: Farmers Weekly