Agroforestry has not been adopted in the UK despite the potential it has to diversify output while reducing the opportunity cost of lost agricultural production. In part this reflects the limited nature of the grant aid available. This article demonstrates that the current pro rata restriction that grant aid is paid in proportion to the number of stems planted means that annual incomes derived from silvoarable or silvopastoral systems compare poorly with those from agricultural enterprises alone. By facilitating a greater variety in the spatial arrangement of trees, agroforestry systems offer a potential diversity of landscape forms and wildlife habitats that are not available from conventional plantation forestry. The article argues that this contribution to environmental diversity should be reflected in the level of grant aid provided for agroforestry. Silvopastoral systems based on sheep are shown to offer the greatest potential, and proposals are made for encouraging the development of such systems
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