Farm groups warn £240m SFI budget may fall short of demand

Farmers in England are set to gain access to a redesigned £240 million Sustainable Farming Incentive, but industry leaders have warned the budget may fall short of demand.

The government has announced £290m for new and improved farming schemes, including £240m for the Sustainable Farming Incentive 2026 and at least £50m for new Countryside Stewardship Higher Tier agreements.

Ministers said SFI26 had been designed to be simpler, fairer and more accessible, with a stronger focus on family farms.

Applications are expected to open from 30 June 2026 for small farms and farms without an existing Environmental Land Management revenue agreement.

A second application window is due to open in September 2026, giving all farmers and land managers the opportunity to apply.

The government said SFI26 had been developed with farmers and industry, and would build on more than £560m already committed.

The scheme will pay farmers for practical actions that benefit their land, including improving soil health, keeping waterways clean and creating space for wildlife.

Several actions will also encourage reduced use of synthetic fertilisers in favour of more sustainable alternatives.

Ministers said this could help cut input costs and improve resilience to global market shocks.

But farming organisations have warned that the new budget may not be enough to meet demand.

The NFU said the announcement offered some welcome certainty, but warned that funding for Environmental Land Management schemes was falling short of farmers’ ambition to deliver for the environment.

The union said the warning came as farm businesses continued to face rising fuel, fertiliser and electricity costs linked to the conflict in the Middle East.

NFU Vice-president Robyn Munt said: “Today’s budgets for key agri-environment schemes provide welcome certainty for farmers and growers, giving them a clearer basis to plan for their businesses.

“However, it is becoming abundantly clear that there is a significant gap between government and farmers ambition for ELMs and the funding to deliver it.

“At a time when farm businesses are already hard pressed by the Middle East conflict, we urge Defra Ministers to step up funding to meet demand from farmers to deliver for the environment and food security.”

The NFU said more than 13,000 Countryside Stewardship Mid Tier agreements were due to end this year.

It warned there was a risk the budget would not stretch far enough to support farmers already delivering for nature as they move into SFI26.

Ms Munt said: “These are farmers who have spent years investing in hedgerows, looking after our waterways and creating habitats.

“This contract with government must not be broken at such a critical time, bearing in mind the legislative targets government itself has set for environment delivery.”

The Country Land and Business Association (CLA) also welcomed the announcement, but warned that £240m was unlikely to meet expected demand.

CLA Deputy President Joe Evans said: “This SFI budget announcement is welcome, but the funding may not stretch far enough. A £240 million budget is unlikely to meet expected demand.

“It is particularly important that farmers with agreements ending later this year are able to transition seamlessly into new agreements.

“With funding capped and application windows limited, there is a risk that some businesses will miss out, creating uncertainty at a crucial time.”

The government said the redesigned scheme would introduce a £100,000 annual agreement cap to help spread funding across more farm businesses.

Each farm business will be able to hold one SFI26 agreement, while the SFI management payment will end for new agreements so more funding can be directed towards on-farm actions.

Nearly all SFI26 actions will move to a standard three-year agreement length, which ministers said would simplify the scheme and improve access for tenant farmers.

A new cap on adding land to rotational actions after year one will also be introduced to provide greater budget certainty and support more agreements.

At least £50m will be available for new Countryside Stewardship Higher Tier agreements this year, supporting targeted environmental improvements where they will have the greatest impact.

Environment Secretary Emma Reynolds said: “Farmers are fundamental to food security. They produce the food we rely on, support rural communities, and play a vital role in our economy.

“Under the previous Sustainable Farming Incentive, a quarter of funding went to just four percent of farms, so we have redesigned it to be simpler and fairer, helping more farms grow, boost productivity and protect the natural environment they depend on.”

The government said farmers with ELM agreements due to end soon should be able to access the full SFI26 offer.

It is building new functionality into the SFI26 application service to allow farmers to apply for land currently in expiring agreements before those agreements end.

This is expected to be available from the start of the second application window in September 2026.

Farmers with agreements due to expire may need to consider whether to apply in the first window or wait until September, when the new functionality is expected to help them move land from expiring agreements into SFI26.