First-come, first-served SFI window raises fears of farmers missing out

The government’s reshaped Sustainable Farming Incentive will operate on a first-come, first-served basis from 2026, raising concerns that some eligible farmers may be locked out once the budget is spent.

Defra Secretary Emma Reynolds confirmed at the NFU Conference on 23 February that SFI, which replaced EU-era subsidies, would relaunch after being closed with little warning in 2025.

The revised scheme will be smaller, with paid actions reduced from 102 to 71. A £100,000 annual payment cap will apply, several rates have been cut, and the £20/ha management payment scrapped.

All agreements will now run for three years. Each business will be limited to one application, and rotational actions will not be allowed to increase beyond their first-year area.

Two application windows are planned. The June round will be restricted to farms under 50ha and those not already in other government-funded schemes, excluding Landscape Recovery. A second window in September will open to all applicants but will close once the allocated budget is exhausted.

With funding effectively capped and time-limited, advisers warn demand could outstrip supply within weeks.

David Morley, environment and conservation manager at H&H Land & Estates, said repeated revisions had already dented confidence.

“There have been too many changes to this scheme,” he said. “Farmers need stability and clarity to plan effectively. Continual revisions undermine confidence, particularly when agreements run for multiple years.”

He warned that timing could leave some businesses excluded.

“This means that farmers currently in Mid-Tier agreements finishing at the end of this year, including those extended by 12 months, may well miss out,” he said.

“The same applies to those with SFI agreements ending later in 2026 or early 2027. To enable farmers to plan, it is really important that the scheme is open for more than a few weeks each year.”

While some upland moorland options will see payment increases from 2026 — with higher rates applied retrospectively — other actions have been removed altogether.

UPL7, covering shepherding without livestock removal, has been dropped. UPL4 has also been removed, meaning grazing payments for cattle and ponies on moorland will only apply where at least 70% of livestock units are cattle or ponies.

“This seems a shame,” Mr Morley said. “It is rarely practical to graze unenclosed moorland with such a high proportion of cattle or ponies, so the change will disincentivise their introduction.”

The CMOR1 moorland surveying option has also been scrapped.

“This action has been invaluable in helping farmers understand and enhance the public goods they deliver – biodiversity, water quality, carbon storage, flood mitigation and historic features,” he said.

“Defra says it delivered poor value for money, but the benefits cannot be judged in purely monetary terms. Its removal is a missed opportunity to improve engagement between farmers and Natural England.”

Payment reductions to widely used options — including herbal leys, winter bird food and legume fallow — have also raised concern. Defra maintains earlier rates were overly generous and risked taking land out of production.

Mr Morley believes better targeting would have achieved more.

“Area limits or block size restrictions, particularly for winter bird food, would have targeted environmental delivery more effectively without undermining uptake,” he said.

“The reduced payments now fail to reflect the genuine environmental value of these options.”

Several planning-related actions, including soil testing, nutrient management and integrated pest management plans, have also been removed.

The only endorsed SFI option requiring Natural England approval — management of species-rich grassland — has been withdrawn, meaning farmers must now apply through Higher Tier Countryside Stewardship if they wish to pursue it.

“Given the well-documented challenges in accessing Higher Tier, there is now a real risk that priority grasslands will instead be entered into other SFI actions that are not appropriate,” he warned.

Mr Morley concluded that the reforms fall short of meaningful simplification.

“Overall, the changes to the scheme do not represent meaningful simplification,” he said.

“While this may allow the government’s budget to stretch a little further, it is unlikely to help farmers deliver the significant environmental gains that are needed across the country.

“If government is serious about environmental delivery, schemes must be practical, properly funded and above all, stable. Farmers need confidence to commit for the long term.”

With applications set to close once funding runs dry, the success of SFI 2026 may hinge less on design and more on whether farmers believe it will still be there next year.