© Simon Rawles
New report finds up to 45% increase in commercial return for nature-friendly farms
A new report reveals a viable business model for farmers to move towards production systems which increase profitability, reduce reliance on external inputs, and contribute to environmental recovery.
The research, conducted by Nethergill Associates, looks at 165 farm business accounts [1] detailing how agricultural outputs can be made more profitable before support payments and other revenue streams are taken into account.
The report, Farming at the sweet spot – how farming with nature can make you happier, healthier and wealthier, finds that maximising production is both financially and environmentally unsustainable if reliant on large quantities of fossil fuels, artificial fertilisers, and animal feed.
Over the past two years, Covid-19, the war in Ukraine [2] and Brexit-related labour shortages have exposed the fragilities of the food system. Farmers facing impossibly tight profit margins are feeling the added financial pressure of sky-high inflation in energy and fuel costs while navigating increasingly unpredictable and extreme weather events.
Many farmers have responded to these pressures by adopting strategies to increase farm output, but have found insufficient financial return on their investment. The new report published today details the high costs of this ‘high input, high output’ system and shows how the economics of nature-friendly farming stack up as a viable alternative business model.
Farming at the sweet spot, published by the Nature Friendly Farming Network and The Wildlife Trusts, presents robust analysis of a ‘sweet spot’ called the Maximum Sustainable Output (MSO) which benchmarks improvements to commercial returns by assessing a farm’s revenue, variable, and fixed costs.
If farming at the level of MSO, the study finds that the staged reduction of costly inputs, such as artificial fertiliser, pesticides, and imported feed concentrate, makes farmers significantly better off across all farm systems studied.
The predicted commercial returns, before farm support payments, sees an average increase [3] of 10% - 45%. By farm sector, the commercial return is 45.3% for lowland livestock, 39.1% for upland livestock, 32.7% for dairy systems, and 9.5% for lowland arable farms.
If farm output is underpinned by recovering natural on-farm assets, such as soil health and grass yield, it strengthens farm business resilience, increases stability against external shocks and stressors, and reduces reliance on inputs.
The resulting environmental benefits of moving to MSO can also significantly improve farm ecosystem functions, such as pollination and soil health, improved water quality, and reductions in GHG emissions.
This approach to farming that works in harmony with nature would help put farmers in a position to take advantage of a new era of farm support that is increasingly focused on the provision of public goods through environmental delivery.
Craig Bennett, chief executive of The Wildlife Trusts, says: “For decades, British farmers have been sold the story that maximising output will make them more money. This has been proven not to be the case, with farmers now facing harsh economic conditions alongside unpredictable and extreme weather conditions. Meanwhile, intensive agricultural practices have been catastrophic for UK wildlife and there’s a clear need to mitigate and adapt to climate change. We need a new approach which works for farmers, nature and climate. Our report offers a roadmap to a new farming system which addresses these challenges and secures a prosperous future for farmers.”
Martin Lines, CEO, Nature Friendly Farming Network: “The hidden costs of unsustainable farm practices are hitting farm businesses hard. Our over-reliance on costly inputs is to the detriment of our farmed environments. This report charts a way forward for the sector to strengthen its resilience by working with nature, not against it. The ability to measure the financial and environmental sustainability of farm businesses, using naturally available resources as an indicator of efficiency, takes great strides towards a truly sustainable food system that underpins the UK’s long-term security.”
Chris Clark, Nethergill Associates: “This approach changes the yardstick for success away from the volume of production, to one that focuses on maximising commercial returns (before support payments) and leads to a way of farming that is much more aligned to farming in balance with the natural resources available.”
You can read Farming at the sweet spot – how farming with nature can make you happier, healthier and wealthier here.
Notes to editor
1. The report draws on the analysis of 165 farm businesses in upland and lowland areas of the UK, mainly livestock (beef, sheep, dairy) as well as some mixed and arable farms. It has not looked at the horticulture or pigs and poultry sectors.
2. Currently, the rising costs of environmental degradation and declining soil health are absorbed by farm businesses through dependency on expensive artificial inputs to substitute the landscape’s natural fertility. After the war in Ukraine pushed up prices and disrupted supply, rising chemical fertiliser prices added an estimated £160 million to the sector’s input costs.
3. Although the adoption of the MSO approach would result in a reduction in output in the early years, the report highlights that previous production levels can be achieved as the farm’s natural assets recover over time. By keying into natural processes and changing farm management, soil health can be restored supporting increases in livestock weight per hectare.
Farmers available for interview
The following farmers are available for interview on request to outline their experiences of attaining the ‘Sweet Spot’ in their businesses. If you would like to arrange an interview, please contact Emma Robertshaw: erobertshaw@wildlifetrusts.org 07779 657515.
David Lord, arable farmer
Earl’s Hall Farm, Essex
- As a result of applying the MSO concept on his farm David has maintained the same yields with a net profit which is 32% of higher
- Through a range of different management techniques focusing on building soil health David has reduced the use of nitrogen fertiliser, herbicides and fungicides by 30%
- Other variable costs, such as fuel use have reduced by between 30%-50% as have fixed costs from a reduced tractor fleet
- David’s soil health management techniques are actively working towards reduced farm emissions and overall improved soil health. His practices aim to maximise carbon storage, crop resilience, farm profitability and improved resilience to extreme weather
James Robinson, dairy farmer
Strickley Farm, Cumbria
- James farms at Strickley Farm, a 300 acre organic dairy farm that has been free from artificial fertilisers or pesticides for the past 16 years
- James has achieved similar levels of output to conventional dairy farms through an approach that harnesses nature to build soil health and natural fertility
- James undertakes regular soil testing to ensure that grass is supplied with the right levels of nutrients to avoid emissions from organic fertiliser application
- A network of multi-species swards have been integrated into the improved grasslands to help improve soil health, store more carbon and reduce the need for bought in feed
- Recently, James has taken steps to slash energy costs by investing in solar power, which will produce half of the farm’s energy needs
- James has been undertaking long term business planning to further reduce fixed and variable costs to adapt to the rollout of new farm payments
Nic Renison, mixed farmer
Cannerheugh Farm Cumbria
- In 2013 Nic and her husband Paul, came to the conclusion that high input - high output system was not having the desired effect on the profitability of the farm
- Since then considerable effort has been made to reduce operating costs, with the farm halting the use of fertilisers, sprays and bought in feed over 6 years ago
- They have also gradually reduced their sheep herd over time due to problems with low growth rates, lameness and worm burdens
- Cattle are grazed on a rotational system to help stimulate grass growth, reduce compaction and avoid poaching
- Nic believes that the farm could strive for increased productivity, but that it would require a lot more effort with negligible increases in returns
Nature Friendly Farming Network
The Nature Friendly Farming Network (NFFN) is a farmer-led organisation embracing farm-level solutions to local and global problems, such as biodiversity loss and climate change. They have a growing farmer membership across the UK, uniting those who believe farming harmoniously with nature is the most sustainable way to produce food and other products from our land. They are committed to securing policies that support this way of farming and advocate fairer returns for farmers, improved access to sustainable food and greater stewardship of the environment. They champion how regenerative practices make better business sense for farms of all locations, sizes and systems, believing nature-friendly agriculture is essential for long-term security.
The Wildlife Trusts
The Wildlife Trusts are making the world wilder and helping to ensure that nature is part of everyone’s lives. We are a grassroots movement of 46 charities with more than 900,000 members and 38,000 volunteers. No matter where you are in Britain, there is a Wildlife Trust inspiring people and saving, protecting and standing up for the natural world. With the support of our members, we care for and restore special places for nature on land and run marine conservation projects and collect vital data on the state of our seas. Every Wildlife Trust works within its local community to inspire people to create a wilder future – from advising thousands of landowners on how to manage their land to benefit wildlife, to connecting hundreds of thousands of school children with nature every year. www.wildlifetrusts.org