Regenerative farmers are being encouraged to rethink their approach to crops and livestock amid increasing concerns over profitability.
Poor margins, rising costs and lower support payments are continuing to squeeze margins, growers and livestock producers were told during a business seminar at last month’s Groundswell festival.
New estimates
Financial pressure is building across the arable sector and more businesses are recognising that doing something differently may now be essential, visitors were told at Lannock Farm, near Hitchen, Hertfordshire.
Many regenerative arable businesses remain unable to make a profit from production alone, according to estimates from an updated 600ha Regen Farm model devised by farm business consultants Andersons.
While harvest 2026 is expected to improve on the last two seasons, the business still records a small production loss before payments from the Sustainable Farming Incentive (SFI) return it to surplus.
“Simply doing the same thing and hoping the situation improves is not a viable business strategy for many anymore,” said Andersons partner Richard King, Businesses should review their structure rather than wait for conditions to improve, he added.
The model shows production margins have remained negative since harvest 2024 after wet weather cut yields and grain prices weakened. Dry conditions then reduced yields again in 2025, while overhead costs continued to rise.
Although 2026 prospects are brighter, yields have again been challenging this harvest, with higher fertiliser, fuel and general inflation expected to increase production costs again in 2027.
New approaches
Andersons warns that SFI income is likely to decline as agreements signed in 2024 come up for renewal. Larger businesses may be particularly affected by the £100,000 payment cap, reducing an important income stream.
Collaboration between neighbouring farms offers one route to improving profitability by lowering costs and increasing efficiency, suggested Mr King. But any agreement must work for all parties.
“Working together with other farmers is a way of improving performance and lowering costs,” he said.“The idea is to grow the size of the cake rather than argue about how the cake is divided.”