The Basic Payment Scheme (BPS) and delinked payments have long offered farmers a crucial financial buffer against the volatility of agricultural markets. However, with this support now being phased out – more rapidly than many anticipated – farm businesses are increasingly exploring new strategies to offset the shortfall and create alternative income streams.

While it may pose challenges, the loss of BPS also presents opportunities for farmers to re-evaluate, adapt and innovate.

By combining various strategies tailored to their specific circumstances, there are several ways farmers and landowners can navigate the transition, ensuring the sustainability of their operations, securing their financial future and supporting their livelihoods.

1. Efficiency, innovation and cost reduction

Optimising operational efficiency is key in an unsupported market. Embracing technology, streamlining processes and improving resource management can significantly reduce costs. A full review of your current farming enterprise can identify how to improve efficiency and unlock significant savings. Using share farming or Contract Farming Agreements (CFAs) can also provide access to contractors with the latest technology, which can reduce the capital burden on the farming business, while at the same time achieving stability in sales and income.

2. Value addition and market strategies

Adding value to products by processing or packaging them differently can open doors to higher-value markets. Additionally, exploring new business lines, such as exports or niche local markets, can diversify revenue sources and reduce the risk of exposure.

3. Diversification beyond traditional revenue streams

Relying solely on one source of income, especially in agriculture, can be a potential risk. Exploring other revenue streams such as agritourism, farm shops, specialist crops, or educational programmes can create additional income.

4. Public funding

Environmental stewardship has provided an alternative farming income stream for nearly 40 years; however, the future of these schemes is currently unclear. While, historically, taking poor-performing areas of the farm out of production or replacing break crops with stewardship options has provided a benefit both environmentally and financially, shorter-term agreements under the Sustainable Farming Incentive (SFI) and uncertainty around government policy has put a question mark over this revenue stream.

Where appropriate, environmental schemes can provide a key income stream but the reliance on these should be considered in the round within any farming business.

5. Private funding

Whether selling Biodiversity Net Gain units to developers to mitigate environmental impact, or helping firms meet sustainability goals through utilising natural capital, there are now several potential revenue streams for rural businesses from private finance, albeit the market is taking longer to develop than initially expected. While still a relatively new and emerging market, many farms are exploring the idea of creating farming cluster groups to provide nature-based solutions at scale to the private sector, reducing the commitment required from any individual landowner.

Clearly, what works for one farm may not suit another, so exploring a mix of strategies and adapting them to individual needs is crucial for success.

Further information

Contact Stuart Nicholls or Thomas Brunt