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Nature provides farmers with ‘natural capital’ for their businesses in the form of soils, grass, water and geology, which farm businesses work with for crop or livestock production. Where these natural assets are not managed correctly, farm productivity will reduce. Taken beyond their natural production limit – for example by increasing stocking levels to more than the grass can cope with or cropping more than the soil can naturally support – the farming business will need to adapt to maintain production. This is achieved via additional inputs, such as fertilisers or the requirement to purchase additional feed to maintain productivity.

This increases the overall costs of production and potentially reduces the profitability of the farm business. While natural resources are free and essential for all farming to take place, the subsequent impact of farming on nature is often overlooked. When farmers work with nature to protect and restore in its optimum health, then farm business will benefit.

All farm businesses have their related running costs subdivided into two areas:

Fixed costs to the farm business which are unavoidable – e.g. rent, rates, insurance, land charges, labour, machinery depreciation
Variable costs – e.g. fuel, seed, fertiliser, animal feed, pesticides, contract labour
The ‘Less is More’ report has subdivided theses variable costs into two further categories:

Productive Variable Costs (PVC’s) – such as contract labour and home-grown feeds
Corrective Variable Costs (CVC’s) – such as grass substitute feed, artificial fertilisers, vet medicine

There is a point at which Productive Variable Costs turn into added Corrective Variable Costs showing that variable costs as a whole are non-linear.

This point where PVC’s turn into CVC’s is shown as the Maximum Sustainable Output (MSO).

MSO shows the volume of outputs that can be achieved before they need to be corrected with additional inputs to maintain production, meaning profitability can deteriorate as outputs are introduced beyond MSO.

By establishing the MSO point of a business, nature management and the role it plays in the farm business becomes evident.

Topline learnings:

The aim should be to farm to the MSO line to get maximum returns both for nature & business
The MSO point can vary year to year
For those farming to the right of the MSO line, income could increase if the system were less reliant on other non-nature input
If farmers farm with nature, then natural productivity should be increased to the maximum sustainable output (MSO) level. Beyond this, farmers will degrade the natural asset and reduce profitability as additional inputs are required.
Farm business mindset needs to move from “high productivity at all costs” to “a balance of farming with natural assets and careful management for our countryside”. The long-term benefits from this approach are not only for farming but for nature too. 

Sustainable Farming Insights