SFI now accounts for a far greater share of England’s farming budget as the agricultural transition gathers pace
Spending on England’s Sustainable Farming Incentive surged to £738 million last year as direct farm payments fell by around two-thirds, highlighting the accelerating shift in how government support reaches farmers.
New Defra figures show SFI expenditure more than doubled from £305m in 2024–25 to £738m in 2025–26, while spending on direct payments dropped from £813m to £265m.
The figures, contained in Defra’s Farming Annual Report 2025–26, published on 15 September, cover the fifth year of England’s agricultural transition away from the EU’s Common Agricultural Policy.
Overall spending through Environmental Land Management (ELM) schemes climbed from £1.396bn to £1.819bn during the year, meaning environmental schemes now account for a much larger share of England’s farming budget.
However, total farming-budget expenditure fell from £2.614bn in 2024–25 to £2.322bn in 2025–26.
Across the two financial years, Defra spent £4.936bn against the government’s £5bn farming commitment, equivalent to 99% of the amount pledged.
The figures show the extent to which public funding is being redistributed as the former system of area-based direct support is phased out and a greater proportion of spending is directed towards environmental and land-management agreements.
Alongside the £738m spent through SFI, Defra paid £887m through Countryside Stewardship, Environmental Stewardship and associated capital agreements, while £25m went to Landscape Recovery.
Other ELM expenditure included £96m on water management grants, £22m through Farming in Protected Landscapes and £19m for tree and biodiversity grants.
The growth in SFI spending has been accompanied by a continued increase in the number of farms participating in the scheme.
Defra’s annual report said that, as of November 2025, there were 44,500 live SFI agreements covering 35,600 farming businesses.
At that point, around 3.2 million hectares — 36% of farmed land in England — was being actively managed under SFI, with a further one million hectares covered by assessments and plans.
Defra said the agreements were supporting measures including 977,000 hectares of arable land being farmed without insecticides, 371,400 hectares of low-input grassland management and the protection or restoration of 168,600km of hedgerows.
More recent figures show SFI participation has since increased further.
As of 1 September 2026, England had 48,000 live SFI agreements managed by 38,300 farm businesses, including 3,100 agreements entered through the first application window of SFI 2026.
Defra received 7,000 applications during the first SFI26 window, which was targeted at smaller farms and businesses without an existing ELM revenue agreement.
The average annual value of agreements entered through the window was £9,700.
A second SFI26 application window, open to all eligible farmers and land managers, is expected to open from 22 September.
The latest figures underline the growing importance of environmental agreements to farm incomes as direct payments continue to disappear.
For businesses that historically relied heavily on the Basic Payment Scheme, an increasing proportion of government support now depends on participation in schemes paying for defined environmental and land-management actions or on securing funding through grant programmes.
Defra also reported lower-than-forecast expenditure in parts of the ELM programme during 2025–26.
The department spent £73m less than forecast on ELM capital grants, which it attributed to lower-than-expected claim rates from farmers.
A further £33m less than forecast was spent on ELM revenue agreements, with Defra saying this reflected agreement holders applying for changes of circumstance.
Spending elsewhere in the farming budget was mixed.
The Farming Investment Fund accounted for £31m, down from £46m the previous year, while expenditure through the Farming Innovation Programme increased from £38m to £43m.
Overall productivity and innovation spending dropped from £283m to £114m, partly reflecting programmes that recorded expenditure in 2024–25 but none in the latest financial year.
These included the Farm Resilience Fund, which fell from £17m to zero, and the Farming Recovery Fund, which fell from £59m to zero.
Animal health and welfare grants, meanwhile, increased from £20m to £22m.
Taken together, the figures show a farming budget undergoing a major redistribution rather than simply an across-the-board increase or reduction in support.
Direct payments have fallen sharply, while SFI and the wider ELM programme now absorb a substantially greater share of expenditure — making access to environmental agreements increasingly significant to the amount of public support reaching individual farm businesses.