D3.4. Valorization of AF products, co-products and byproducts from AF systems

This report evaluates the long-term financial performance of silvoarable agroforestry (AF) systems relative to a conventional monoculture (CMC) control, with the aim of determining whether AF can be economically competitive over a full system life cycle and how sensitive outcomes are to yield and price variability. The assessment is conducted at the field level using a functional unit of €/ha with an annual time step, and a 30-year horizon to capture the establishment phase and delayed returns associated with woody perennials.A field-level Excel cash-flow model was developed to simulate annual costs and revenues over the rotation. The model parameterises the two main AF components—AF crop alley and AF tree belt—separately on a per-hectare basis and then combines them into an integrated AF system using the crop-to-tree area share. Model inputs were derived primarily from farm interviews and field visits conducted in 2024–2025, complemented, where needed, by datasets on inputs, machinery parameters, and subsidies. To reflect intrinsic fluctuations in yields and prices, uncertainty was represented through a Monte Carlo approach: parameter means were assigned normal distributions based on expected two-sided relative variability, and each 30-year system rotation was re-simulated 1,000 times to estimate distributions of outcomes and associated uncertainty metrics, including the standard deviation (SD) and coefficient of variation (CV).Six AF systems were analysed across Denmark (DK), the UK and Hungary (HU) to capture variation in design and context: Astrup Hedegaard (DK), Nyborggaard (DK), CFE (DK), Cockle Park (UK), Valaha Tanya – Orchard (HU), and Valaha Tanya – Wild belt (HU), with a Danish cereal-based conventional monoculture (CMC) as the reference baseline. Overall, five of the six AF systems outperform the CMC in average annual profitability, while Cockle Park remains below. The CMC provides a baseline profitability of 680 €/ha/yr (including 222 €/ha/yr in subsidies), with machinery and external inputs accounting for the majority of costs. Among the AF systems, outcomes are strongly site-specific: Astrup Hedegaard shows the highest profitability (4,114 €/ha/yr), driven by low establishment costs for the berry component and favourable business relationships that both reduce mowing costs and increase the value captured from tree outputs. Valaha Tanya – Wild belt also performs strongly (2,606 €/ha/yr) owing to substantially high revenues, whereas Valaha Tanya – Orchard exhibits lower profitability (696 €/ha/yr) due to high labour and machinery costs and a longer payback period. Nyborggaard achieved 765 €/ha/yr, with high labour costs concentrated in fruit harvesting but supported by a mechanised crop alley and favourable marketing arrangements. The experimental CFE system produced 787 €/ha/yr; its design enables mechanised coppice management and limits tree-area cost impacts through a small tree-belt share, while no-input management constrains crop yields.Across cases, two recurring mechanisms explain when AF is financially competitive. First, although several AF designs incur high establishment costs—particularly fruit-tree systems with labour-intensive planting and harvesting, and high-density coppice systems—these costs are spread across the rotation and can be recovered at the whole-system level when subsequent tree management is relatively low, and crop revenues stabilise early cash flows. Organic and low-input AF systems, which dominate the studied sites, generally have lower long-term operating costs because they rely less on energy-intensive external inputs and associated machinery. Second, AF performance depends critically on the ability to valorise tree-derived outputs (fruit, coppiced biomass, and co-products) once they become commercially productive through suitable value chains; where this is achieved, tree revenues can offset lower crop productivity commonly observed relative to monoculture under tree–crop competition, especially under organic management.The uncertainty results indicate that profit variability is driven primarily by parameters related to energy-intensive inputs and machinery costs (diesel, maintenance, depreciation). Several AF systems show reduced uncertainty relative to the CMC, either in absolute terms (lower SD: CFE, Nyborggaard, Cockle Park) and/or relative terms (lower CV: CFE, Astrup Hedegaard, Nyborggaard), consistent with diversification effects when crop and tree components are combined.