THOUSANDS OF pounds are waiting to be claimed by farmers who can prove they are benefiting the environment from next year onwards.

Many visitors to Smithfield were amazed to find they could claim much, if not all, of the cash lost through modulation of the new single farm payment, particularly in the early years, said consultant Simon Britton of farm business consultant Andersons.

“Farmers have been shocked to learn of the massive deductions that are going to be made, but equally surprised at how easy it is to get money back,” he said.

Modulation – cuts to pay for a variety of green schemes – will reduce the SFP in England by 5% in 2005 and 10% in 2006, and by a predicted 13% by 2012.

Actual cash amounts lost would vary from farm to farm, said Mr Britton. But two typical clients, a 182ha (450-acre) arable unit and a 100ha (250-acre) livestock hill farm, stood to lose 1910 and 1460 respectively next year, and twice as much in 2006, he added.

However, the entry level scheme – part of the new Environmental Stewardship Scheme – provided an excellent opportunity for every farmer joining early next year to claim back a good deal of that cash, said Mr Britton.

By satisfying the requirements of the scheme – a points-based process for enhancing specific environmental features – farmers will be paid 30/ha (12/acre).

On the arable example above, that will amount to 5436 a year, or nearly three times as much as the farmer stands to lose through modulation in 2005. In 2006, he should still recoup about 1.5 times the loss. The livestock farm stands to gain 2648 in 2005 – nearly twice the deduction. The following year he stands to get 93% of the cut returned.

Mr Britton hoped similar gains would be made in other UK regions that are drawing up similar schemes. “The ELS is a great opportunity for everybody to claw back some of their modulation. It is not particularly onerous and most farmers should be able to satisfy the requirements.”

Any cash bonus is likely to be particularly welcome next year. Andersons says total farm income in 2005 is likely to dip slightly below this year”s level to just under 3bn.

“Reduced cereal income is the main reason,” said partner Richard King, speaking at the launch of Andersons Outlook 2005 at the show. A good deal of this year”s poor quality harvest remained to be sold and new crop prices were not encouraging, he added.

Profitability would also be pressured by higher input prices, said Mr King. “Oil price rises have pushed up fertiliser, fuel and chemical costs. In many areas of the country, farmers are having to increase wage rates to secure the quality of staff needed in modern agriculture.”

Output volumes were unlikely to change much in 2005, he said, with most producers continuing their current systems as they grappled with the introduction of the SFP system.

“Only in the autumn or winter of 2005 will many decisions be reached on future farming policy as the implications of decoupled support begin to come clear,” said Mr King. “Prices will be a key issue at this point.”

Longer term, world markets for many commodities were strong, and grain prices could rise if there were a problem in a main production region, he said. Low interest rates and inflation were helping farming businesses, and CAP reform would bring as many opportunities as threats.

“For every person who decides to use his SFP as a pension and stop farming, land and other resources will become available to those who wish to grow their businesses,” said Mr King.