Is the SFI 2026 a cause for hope or uncertainty?

What is the Sustainable Farming Incentive (SFI)? 

The Sustainable Farming Incentive (SFI) is England’s flagship post‑Brexit farm support scheme, designed to pay farmers and land managers for adopting practices that protect the environment while improving productivity, resilient food systems. It sits at the heart of the government’s Environmental Land Management Schemes (ELMs), replacing the EU’s Basic Payment Scheme with a new approach based on “public money for public goods.” 

Under ELMs, around £2.4 billion per year, from 2023-25, was earmarked to reward outcomes such as healthier soils, cleaner water, restored habitats and climate resilience. ELMs are formed of the Sustainable Farming Incentive (SFI); Countryside Stewardship (CS) which pays for more targeted actions relating to specific locations, features and habitats; and Landscape Recovery which pays for bespoke, longer-term, larger scale projects to enhance the natural environment. 

In practical terms, SFI pays farmers to carry out defined “actions”, for example testing soil organic matter, managing grassland with lower nutrient inputs, or maintaining hedgerows, through multi‑year agreements. The variety of actions is designed to fit all farm types as every farm is different. DEFRA defines the scheme as supporting practices that protect the environment, support food production and improve productivity, deliberately linking sustainability and farming viability.  

What this means for the wider food system

SFI is not about paying farmers to stop producing food. Instead, it is about investing public money so farms can deliver food and environmental benefits at the same time, recognising that healthy soils, water and biodiversity underpin long‑term food security. 

What was SFI in its previous versions? 

The SFI 2023 (SFI23) offer launched in October 2023 and marked the first full iteration of the scheme. It focused heavily on planning and baseline actions, particularly around soils, nutrient management, pest management and hedgerows. Agreements typically ran for three or five years. 

The most widely adopted actions were planning actions, such as soil assessments, nutrient management and pest management, alongside management actions like low‑input grassland and herbal leys.  

The expanded SFI 2024 offer built on SFI23 by increasing the menu to 102 actions, incorporating many former Countryside Stewardship options. New actions included no‑till farming, precision nutrient application, agroforestry and cover crops. 

By October 2025, there were 44,500 active SFI agreements in England, 25,200 in SFI23 and 19,300 in the expanded 2024 offer. Uptake was highest in the South West and lowest in the North East. In 2024, £577 million was paid through SFI, alongside £678 million through Countryside Stewardship, totalling £1.3 billion. 

However, in March 2025, DEFRA abruptly closed SFI to new applications once budgets were fully allocated. The lack of notice resulted in legal action and the Government was forced to re‑open SFI 2024 to a limited group of applicants. 

What are the latest changes in SFI 2026? 

In February 2026, DEFRA published details of the re‑designed SFI 2026 offer, positioning it as a reset focused on simplicity, fairness and food production. 

Key confirmed changes include: 

• £345 million in additional funding for the new offer 

• A reduced list of 71 actions, down from 102 

• A £100,000 per‑year cap per agreement, affecting only around 3% of farms but redistributing funding more evenly 

• Each farm business can only have one SFI26 agreement 

• Priority access from June 2026 for small farms (defined as 3–50 hectares) and those without a live ELM agreement 

• A second, wider application window opening later in 2026 

Several payment rates have been adjusted: 

• Increases for selected moorland grazing and shepherding actions 

• Reductions for herbal leys (from £382/ha to £224/ha), winter bird food and legume fallow actions 

• SFI no longer offers the SFI management payment, which is a payment for entering and managing an SFI agreement.  

The payment rates of certain actions were reduced as the Government has argued that previously higher rates, for actions such as herbal leys, made it too attractive to take highly productive land out of food production. 

Alongside SFI, DEFRA has announced a new round of ELM Capital Grants, opening in July 2026, with up to £225 million available for infrastructure such as hedgerow planting, slurry storage, natural flood management and livestock equipment to improve water quality. At the same time DEFRA has also launched the Farming Equipment and Technology Fund (FETF), with £50 million available, and the Farming Innovation Programme, with £70 million available, to support further investment in technology and new R&D to strengthen agriculture.  

Why this is important for the agricultural and food sector 

For decades, many English farms have operated at or near net financial loss, with some relying on subsidies for up to 90% of farm business income. In 2023/24, nearly 30% of farms in Great Britain made an overall loss. 

At the same time, DEFRA has acknowledged that under earlier versions of SFI, 25% of funding went to just 4% of farms, prompting concerns about equity and long‑term sector health. 

Alongside these structural changes, the Government’s announcement of new funding for the Sustainable Farming Incentive directly responds to the A Net Zero Transition Plan’s for the UK Food System policy ask to ‘assess the impact of uplifting SFI payment rates and consider the case for a further increase to improve uptake across farming types’.  

By increasing the overall SFI budget and adjusting payment rates, the new funding strengthens the financial case for farmers to adopt low carbon and nature positive practices. It represents meaningful progress toward improving scheme uptake, supporting a more resilient farming sector while accelerating the transition to net zero. 

The government’s stated ambition, articulated by Environment Secretary Emma Reynolds, is to see more British food on more tables, with SFI redesigned to support food production, not undermine it. 

From the farming community, reaction has been cautious but more optimistic. NFU President Tom Bradshaw described the 2025 closure as “another shattering blow,” but has since said the SFI 2026 offer appears to strike the right balance between simplifying the process and maintaining flexibility. 

With £5 billion committed to farming support between 2024 and 2026, and a £1.05 billion cap on SFI funding, much now rests on whether SFI 2026 delivers stability, confidence and measurable outcomes. Further clarity is expected through DEFRA’s forthcoming Farming Roadmap, due later in 2026. 

SFI 2026 matters because it shapes how England produces food, manages land, and protects nature at the same time. If it works, it underpins food security, climate resilience and rural livelihoods. If it fails, the costs will be felt far beyond the farm gate.