The True Cost of Farmland Habitat Delivery

In this episode, we are talking to Marek Nowakowski, Ecologist, Wildlife Expert and Consultant at Agrii and Paul Pickford Farm Business Consultant.

Establishing farm habitats is a real focus for farmers, today we are going to examine the real cost and benefit.

How can we balance the financial return with the cost of establishment, and ensure that creating wildlife habitats is good for the environment and the financial health of our farm businesses.

Why is the creation of wildlife habitats on farms so important?

Marek Nowakowski, Wildlife Consultant:
Farmland occupies 70% of the land area, and if that land is devoid of wildlife, any remaining wildlife will exist in isolated patches, which are environmentally unstable and prone to failure. Loss of biodiversity represents a loss of opportunity. A diverse ecosystem is resilient, while a weak ecosystem is fragile and prone to collapse. If we don't know which components are essential for biodiversity and start discarding them, it could lead to significant challenges.

What are the key challenges that farmers face in creating wildlife habitats?

Marek Nowakowski:
Farmers are under pressure to adapt to new agricultural practices with a greater focus on environmental responsibility. While the environment is now a priority, farmers still need to maintain profitability to stay in business. This balancing act is crucial; if a farmer goes out of business, environmental efforts will fail along with it.

What are the economic concerns for farmers when establishing wildlife habitats?

Paul Pickford, Farm Business Consultant:
From an economic standpoint, farmers must ensure that environmental efforts are financially viable. Current payment levels for such initiatives are based on outdated income forgone calculations, which do not reflect the quality of work done. This often incentivises farmers to perform these tasks as cheaply and quickly as possible.

How will changes in agricultural policy affect wildlife habitat creation on farms?

Paul Pickford:
The decline of Basic Payment (BPS) Schemes, which will be phased out in three years, poses a significant challenge for farms that relied on these payments for up to 20% of their output. Given that profit margins in well-structured farms are often only around 15% of total output, replacing this lost revenue is critical. Environmental schemes can cover part of the shortfall, but they won't fully compensate for it.

How should farmers decide where to place wildlife habitats on their farms?

Paul Pickford:
Farmers need to identify areas of their land that yield 10-15% below average, as these are often the best candidates for wildlife habitats. Headlands or field edges that experience yield penalties due to compaction or shelter from trees and hedges should be considered. With new environmental scheme options, such as those allowing machinery turning on headlands, farmers can place habitats strategically to maximize efficiency.

What are the real costs of establishing wildlife habitats?

Paul Pickford:
For example, the cost of establishing a pollen and nectar mix, which yields £614 per hectare, includes seed costs of approximately £120 per hectare. In the first year, this yields a gross margin of around £24. In subsequent years (2-5), there are no significant variable costs, maintaining the revenue at £614 per hectare annually, averaging to about £519 per hectare over five years.

Farmers should consider the machinery and labor already available on the farm, as using existing resources can reduce additional costs. While establishing wildlife habitats may take more time per hectare than traditional crops, the fuel and wear costs can be lower.

What risks do farmers face when establishing these habitats?

Paul Pickford:
The main financial risk is the potential failure of the crop to establish. If a seedbed isn't prepared correctly, or if weather conditions are poor, the cost of replanting can be significant. Ensuring proper initial setup is essential to avoid such setbacks.

How can farmers ensure they comply with environmental schemes and maintain payments?

Paul Pickford:
Farmers need to ensure their wildlife plots are correctly established to receive payments. The Rural Payments Agency (RPA) is using advanced technology, such as satellite imagery and drones, to verify compliance. If a plot appears barren when it should be established, farmers risk losing payments.

Can habitat creation be financially viable for different farm types?

Paul Pickford:
The financial viability depends on the type of farm. For example:

• A top-performing farm (10-ton yield) might have an average gross margin of £901 per hectare.
• An average farm (8-ton yield) has a margin around £682 per hectare.
• A lower-yield farm (7-ton yield) averages £552 per hectare.

A habitat yielding £519 per hectare can be a viable alternative for lower-yielding areas of the farm.

What are the key takeaways for farmers?

Marek Nowakowski:
The skill and timing required for quality habitat delivery are as demanding as traditional crop production. Effective planning and understanding the less productive areas of the farm are crucial for maximizing environmental and financial benefits.

Paul Pickford:
Blending environmental work with economic goals can be successful if farmers do the necessary groundwork and integrate these practices into their overall farm management strategy. With proper planning and knowledge, farmers can create a win-win situation for their business and the environment.