Profitability and Efficiency of High Nature Value Marginal Farming in England

Abstract

AbstractThe UK Brexit vote triggered a new wave of policy developments for a future outside the EU. In this context, we analyse the business performance of English hill and upland farms, characterised by marginal economic conditions but also high nature value (HNV). The analysis aims to help identify farm‐level management and policy options for greater economic, environmental and social sustainability. Business performance is measured as technical efficiency and the occurrence and persistence of abnormal profits, estimated through stochastic frontier analysis and static and dynamic panel‐data methods. The results help indicate rationales for recent trends including farm enlargement, farm family diversification, and agri‐environment scheme entry. The single farm payment is found to be negatively associated with farm technical efficiency while agri‐environmental subsidies were positively associated to short‐term farm profitability. Farm adaptation and resilience during a period of likely turbulence in external circumstances is discussed in light of these findings, as well as potential parallels with marginal HNV areas across Europe.