NFFN head of policy Jenna Hegarty looks at what Defra’s latest support offer means for farmers in England.
Defra has now set out the next phase of the Sustainable Farming Incentive (SFI), confirming that the scheme will reopen in 2026 and outlining a series of changes to how it will operate.
The announcement brings some long-awaited clarity for farmers after a turbulent year that saw the scheme abruptly closed to new applicants in early 2025, leaving many farm businesses facing uncertainty about future support.
With the broad outline of SFI’s next phase now clearer, we’ve broken the key developments down into three categories.
The good
SFI will re-open in 2026, with two application windows: June 2026 for small farms (less than 50ha) and those farms without an existing Environmental Land Management (ELM) agreement, and September 2026 for everyone else.
The overall number of actions has been reduced, with some removed due to being low value for money.
Rules have been tightened to restrict certain actions to a maximum of 25% of farm area, including winter bird cover and pollen and nectar flower mix. This should reduce the scope for doing more than is environmentally needed on the ground, while also helping Defra manage the scheme’s budget.
The Defra budget for ELMs capital grants - payments that help cover the cost of one-off actions such as tree planting or hedgerow restoration - has increased from £150m in 2025 to £225m in 2026. However, changes are still needed to better align the grants application process with SFI agreements, which are often unhelpfully out of sync.
The bad
Defra has chosen to keep a largely ‘free-choice’ model in SFI, despite clear evidence that a ‘bundle’ or ‘package’ approach, where actions must be selected in specific combinations, offers much better value for money. It is also simpler for applicants and more effective at delivering the environmental improvements the sector needs.
The new 25% area caps are still too high and do not reflect the evidence of need. For example, winter bird food is critically important but typically only required on between 1% and 2% of a farm’s area. In addition, Defra has reduced the per-hectare payment rate for this action which, in combination, could perversely encourage agreement holders to apply for more action land cover than is actually required.
Despite a stated focus on encouraging smaller farms into SFI, there remains a minimum size threshold of 3ha for eligible applicants. While budget constraints help explain this decision, many highly productive landholdings - for both crops and nature - fall below this threshold.
Many of the scheme improvements required, particularly enabling more guided action choice through action ‘bundles’, depend upon IT systems that are fit for purpose. At present, they are not, to put it bluntly. Adequate investment in Defra and the Rural Payments Agency’s IT infrastructure and systems must be addressed urgently if key improvements are to be delivered by 2027.
The uncertain
Decisions made under the previous Conservative government blurred important distinctions between SFI and Countryside Stewardship (CS) schemes. Some actions currently available through SFI, such as those supporting priority habitats like semi-natural grassland, would be more appropriately delivered through the more ambitious CS scheme. While tightening the SFI actions list makes sense, without sufficient investment in CS there remains a significant risk that some farmers - including those with expiring Higher Level Stewardship (HLS) agreements - will struggle to access appropriate support in the coming months and years.
Defra has introduced a £100k cap on the value of SFI26 agreements as part of its budget control measures. For context, the average Basic Payment Scheme (BPS) payment for farmers in 2020 (pre-farming transition) was less than £30k. However, for a scheme focused on delivering public goods, a cap could limit the uptake of land management actions, particularly on larger farms. A more effective approach would be to ensure both budget control and environmental outcomes through a bundle or package approach.
Defra has also removed the SFI management payment, introduced in SFI23 as tacit recognition of the scheme’s growing complexity. While it represented relatively poor value for money and was therefore a likely candidate for removal, its existence highlighted the need for robust simplification of the scheme. Again, this is best achieved through a bundle approach.
While far from exhaustive, this summary shows that some positive steps have been taken under Defra's still relatively new leadership. However, much remains uncertain and there is still considerable work to do before SFI can be said to provide the level of support the sector needs as part of a coherent and well-funded ELM scheme family.
The NFFN will continue to lobby tirelessly for ELM schemes that offer farmers the vital support needed to make positive changes to land management. This will include further strengthening of SFI, ensuring robust funding and accessibility for CS and Landscape Recovery (LR), and developing a well-resourced farm advisory system that supports peer-to-peer learning between farmers.