12 April 2002

Paving your way to profit with an ESA

Joining an environmental scheme is often seen as an

undesirable option for livestock farms, but one North Yorks

producer is now viewing it as a way to secure a more

viable future for the upland unit, as Wendy Owen finds out

MANY typical upland livestock producers are realising the potential benefits of entering into agri-environment schemes, despite previous convictions that intensive farming was the only way forward.

Thats the belief of Strutt & Parker farm business consultant, Andrew Smith who has been assisting producers in their decision to join such schemes. However, he advises looking carefully at all the options before making a final decision.

"There are six different tier levels within an Environmentally Sensitive Area (ESA) scheme and an ESA project officer has to decide which one is suitable for each individual field on the farm," says Mr Smith. The payments for the fields vary according to this classification, but can range from £20-£250/ha (£8-£100/acre) a year (see table).

"Some types of land might benefit from being in one tier, while others could be more profitable if they were put in another tier. But avoid choosing a particular option purely because of the higher payment rate it offers. That could mean restrictions on farming methods which end up being detrimental to operating the farm on a practical level."

In his work as a consultant in the north east, he has seen a change in attitude towards environmental schemes.

"When people are happy with profit levels, they are unlikely to want to change. But when margins are squeezed it encourages them to look at other options."

Mr Smith has been giving advice to North Yorks tenant farmer, John Pratt, for some time. Together they have come to the conclusion that entering an ESA scheme will provide a more secure footing for the farm business. It will also allow Mr Pratt to concentrate more on his main source of profit – the 68-cow dairy herd.

Low Fors farm at Bainbridge, Leyburn, is a typical upland farm. Although the dairy herd and Swaledale sheep flock escaped the foot-and-mouth cull, sheep numbers were reduced through the livestock welfare disposal scheme because of movement restrictions.

This forced Mr Pratt and Mr Smith to rethink the direction in which the business was going. They have not decided on the finer details yet, but both agree that putting the whole 64ha (160 acre) unit into an ESA scheme would be of benefit. However, it will probably mean reducing sheep numbers still further.

"In effect, Mr Pratt has taken a gamble that lamb prices will not rise significantly in the next five years," says Mr Smith.

"If prices do go up, he will probably not be any better or worse off financially having joined the scheme. But he will have the advantage of having less livestock to manage. That will allow him to focus more on the dairy herd, which is an important issue on this particular farm."

Mr Pratt says he was already considering making changes, but the F&M crisis propelled him into action. Having lost 280 breeding animals through the disposal scheme, he has decided not to build flock numbers back up. That leaves him with just 380 breeding ewes.

"As I understand it, if I go ahead and join the ESA scheme I may only be able to keep about 250 ewes, so I can farm more extensively," he says.

However he has few regrets about reducing sheep numbers. "With just myself and the help of one man, who is retiring, it was difficult to keep up with all the work, especially during winter. And the profitability of the flock had dropped dramatically."

He feels that the least restrictive ESA option might be the only one suitable for his farm. An initial visit by an ESA project officer indicates two-thirds of the farm could qualify for Tier 1 payments and the rest Tier 2.

"This farm is limited because it can only grow grass, everything else has to be bought in. I cannot afford to have too many limitations on the way I graze land and make silage because the dairy cattle are the main source of profitability here.

"I am optimistic about joining the scheme. I want the countryside to remain as it is and I am keen to encourage wildlife on the farm. My only worry is that once I have signed up, restrictions could be tightened and make normal farm practices difficult." &#42

&#8226 Will increase income.

&#8226 Consider which tier.

&#8226 Must reduce sheep.

Environmental schemes can pay, but avoid going for a high rate when it could restrict farm policy too much, says Andrew Smith.


Tier Cropping Payment/

classification year

1A Arable and £20/ha improved grass

1B Meadows, £82-£152/ha pastures, allotments* and other grassland**

2A Herb rich £250/ha meadows

2B Herb rich £145/ha pastures or allotments

* Allotments may include fenced pasture adjacent to open moorland.

** Other grassland will attract the lower rate.

Entering an ESA agreement will mean keeping fewer sheep, but that will leave more time for the dairy herd, says John Pratt.