NEWS

AGRI-ENVIRONMENT SUBSIDIES PROVIDE MORE STABLE FARM INCOMES THAN DIRECT PAYMENTS

Diversifying farm outputs also makes farms more resilient

  • 19
  • JAN
  • 2021

Subsidies paid to farmers for protecting the environment lead to more stable incomes compared with payments based purely on the number of hectares being farmed, according to a new study of farms in England and Wales.

The findings are of great relevance as, post-Brexit, the UK moves to the new Environmental Land Management subsidy system.

The research, from Rothamsted Research, the University of Reading and Newcastle University, also shows that farmers shouldn’t put all their eggs in one basket, as those diversifying into a wider variety of crops or livestock receive more consistent year-to-year incomes - as do those who reduce their use of fertiliser and pesticides.

Lead author and PhD student, Caroline Harkness said: “Farmers are facing increasing pressures due to changes in climate, government policy and prices. Instability in farm income can be a real challenge. It was interesting, and encouraging, to find that farms adopting environmentally friendly practices also had more stable incomes.

“Farmers may be benefiting financially from their environmental management, while in contrast an increase in direct payments per hectare was associated with less stable farm income.

“Environmentally friendly farming practices including engaging in agri-environment schemes, diversifying outputs, and reducing the use of chemical inputs such as fertiliser and pesticides, are associated with ecological and environmental benefits and importantly could also increase the stability of farm income.”

The researchers examined data from the Farm Business Survey for 2333 farms in England and Wales, between 2007-2015, for a range of different farm types. 

Using statistical models, the team examined the effect of farming practices and subsidies on the stability of farm income, and their relative importance over the nine-year period.

An increase in direct subsidies paid to farmers based on the area farmed was associated with less stable farm income, across most farm types.

In contrast, dairy, general cropping and mixed farms that received more agri-environmental payments had more stable incomes in the short and medium-term. However, farms in the so called Less Favoured Areas - predominantly upland farms who graze sheep or cattle, do not see the same stability benefits from agri-environmental payments. 

Ms Harkness said: “Farms in the uplands are already operating in challenging environments and many of the options in agri-environment schemes may not be available or well suited to deliver ecosystem service benefits in these landscapes.”

The results also showed that greater diversity in crop and livestock activities increased the stability of farm income, in dairy, general cropping, cereal and mixed farms - but this was not an important factor for farms that primarily graze livestock.

“Increasing diversity of outputs could make farm businesses more resilient to economic shocks or price fluctuations,” says Ms Harkness.

Reducing the input intensity also seems to be an important factor increasing the stability of income for all farm types, she added. 

“With rising input prices, a concern of many farmers is to control the use of expensive inputs. Whilst farms with higher input costs are more likely to have higher outputs this does not always translate to a higher farm business income, and these farms also saw larger fluctuations in income.”

Dr Jake Bishop, Lecturer in Crop Science and Production from the University of Reading’s School of Agriculture, Policy & Development said: “Our latest research is interesting as it shows that farms that were adopting environmental management actually benefitted financially from their stewardship. This is encouraging news for farmers as the UK moves to the Environmental Land Management scheme.

“Diversifying outputs and more efficient use of agrochemicals is also associated with environmental and ecological benefits, including for soils and pollinators, these benefits may have translated into more stable farm incomes over the nine years we examined.”

About Rothamsted Research
Rothamsted Research is the longest-running agricultural research institute in the world. We work from gene to field with a proud history of ground-breaking discoveries, from crop treatment to crop protection, from statistical interpretation to soils management. Our founders, in 1843, were the pioneers of modern agriculture, and we are known for our imaginative science and our collaborative influence on fresh thinking and farming practices.
Through independent science and innovation, we make significant contributions to improving agri-food systems in the UK and internationally. In terms of the institute’s economic contribution, the cumulative impact of our work in the UK was calculated to exceed £3000 million a year in 20151. Our strength lies in our systems approach, which combines science and strategic research, interdisciplinary teams and partnerships.
Rothamsted is also home to three unique resources. These National Capabilities are open to researchers from all over the world: The Long-Term Experiments, Rothamsted Insect Survey and the North Wyke Farm Platform.
We are strategically funded by the Biotechnology and Biological Sciences Research Council (BBSRC), with additional support from other national and international funding streams, and from industry. We are also supported by the Lawes Agricultural Trust (LAT).
For more information, visit https://www.rothamsted.ac.uk/; Twitter @Rothamsted
1Rothamsted Research and the Value of Excellence: A synthesis of the available evidence, by Séan Rickard (Oct 2015)

About BBSRC
The Biotechnology and Biological Sciences Research Council is part of UK Research and Innovation, a non-departmental public body funded by a grant-in-aid from the UK government.
BBSRC invests in world-class bioscience research and training on behalf of the UK public. Our aim is to further scientific knowledge, to promote economic growth, wealth and job creation and to improve quality of life in the UK and beyond.
Funded by government, BBSRC invested £469 million in world-class bioscience in 2016-17. We support research and training in universities and strategically funded institutes. BBSRC research and the people we fund are helping society to meet major challenges, including food security, green energy and healthier, longer lives. Our investments underpin important UK economic sectors, such as farming, food, industrial biotechnology and pharmaceuticals.
More information about BBSRC, our science and our impact.
More information about BBSRC strategically funded institutes

About LAT
The Lawes Agricultural Trust, established in 1889 by Sir John Bennet Lawes, supports Rothamsted Research’s national and international agricultural science through the provision of land, facilities and funding. LAT, a charitable trust, owns the estates at Harpenden and Broom's Barn, including many of the buildings used by Rothamsted Research. LAT provides an annual research grant to the Director, accommodation for nearly 200 people, and support for fellowships for young scientists from developing countries. LAT also makes capital grants to help modernise facilities at Rothamsted, or invests in new buildings.