A new study has found that Miscanthus offers farmers a long-term profitable and low-risk alternative to conventional crops like wheat and barley, in less productive areas of the farm. By improving farm resilience and long-term profitability, the perennial crop provides a promising solution amid rising uncertainty.

The study from Miscanthus specialist, Terravesta, using certified 2023 UK crop prices and factoring in government schemes such as the Sustainable Farming Incentive (SFI) and Countryside Stewardship (CS), shows that despite high establishment costs, Miscanthus delivers greater profitability over a 10-year period compared to wheat and barley. Beyond this point, its low maintenance costs further boost returns.

Ultimately, it shows that adding Miscanthus to the farm can improve overall resilience and profitability, particularly in low or medium yielding areas.

"Planting Miscanthus may initially appear financially challenging due to high establishment costs and delayed returns. However, this analysis shows that stable, long-term returns outweigh these initial hurdles," explains Terravesta managing director, Florian Ilias.

"Even considering attempts to compensate for low market prices with farming schemes and to capitalise on higher price years, as well as the early opportunity costs when Miscanthus is not yet yielding, farmers are still better off with Miscanthus after 10 years compared to the two alternative crops. Beyond year 10, its low maintenance costs further improve profitability," says Florian.

Key findings

Stable and predictable returns: Miscanthus provides steady income with less vulnerability

to price fluctuations compared to wheat and barley.

Resilient to weather and pests: Unlike annual crops, Miscanthus withstands poor weather

and is pest-resistant, offering dependable yields.

Consistent option in uncertain markets: With stable, inflation-linked pricing, Miscanthus

delivers financial reliability.

SFI and CS fall short: While SFI and CS options are appealing, growing perennial Miscanthus is typically more profitable long-term and less dependent on erratic government decisions.

Long term security: Annual crops or farming schemes do not offer long term security over a period of 10 years.

Why Miscanthus?

Unmatched stability

While wheat and barley prices have fluctuated significantly over the past decade - with wheat ranging from £99 to £227 per tonne and barley from £100 to £224 per tonne - Miscanthus offers predictable, inflation-proof returns. This stability makes it an attractive option in volatile markets.

Lower input costs

"Miscanthus requires no fertiliser, no inputs post-establishment or annual reseeding, unlike arable crops that face rising costs for fertilisers, chemicals, and labour. The cost of fertilisers has also risen sharply, often by more than 100%, and this will continue, with the incoming carbon tax on fertiliser due to hit farmers.

"Additionally, Miscanthus is pest-resistant, eliminating the need for costly treatments," Florian says.

Long-term profitability

The report shows a long-term scenario comparing a 100-hectare 'food farm' growing cereals and a 100-hectare 'biomass farm' growing Miscanthus over a 10-year period.

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Adjusted for inflation over 10 years, the 'food farm' achieved a cumulative net margin of £342,920, driven by early income from arable schemes and two years of unusually high crop prices.

In contrast, the 'biomass farm' faces initial setbacks due to the high establishment costs of Miscanthus but breaks even by year five. With stable yields and inflation-proof (index-linked) prices, it eventually outperforms 'food farm', generating a total profit margin of £424,663—around £80,000 more. The longer Miscanthus remains in production, the greater its profitability compared to traditional arable crops.

Miscanthus is a reliable option, especially in volatile markets.

The comparison of net margins shows the impressive performance of Miscanthus even when compared to a situation of relatively high market prices for wheat (£190 / t) and barley (£175 / t).