Farming for the Future: What SFI26 Means for England’s Farmers
Defra’s revamped Sustainable Farming Incentive offers a leaner, more accessible scheme — with 71 actions, a new £100,000 cap and a phased window system designed to bring more farms into the fold.
After months of consultation, workshops and stakeholder engagement, the government has laid out its vision for the Sustainable Farming Incentive in 2026. The new scheme — known as SFI26 — arrives with a clear message: simpler, fairer and designed to reach more farms across England. Whether you are managing a few dozen acres of upland moorland or a large mixed holding in the lowlands, Defra says there will be something in the offer for you. But the changes are significant, and farmers would do well to understand exactly what has shifted before the first application window opens in June.
A Slimmer Scheme With a Sharp Focus
The headline change in SFI26 is a significant reduction in the number of available actions. Where the 2024 offer contained 102 actions, the new scheme brings that down to 71 — a cut of nearly a third. Defra has been candid about the reasoning: actions with poor uptake, those that delivered limited environmental value, and planning-type actions that generated paperwork rather than tangible outcomes have been pruned away.
Among the casualties are the nutrient management assessment (CNUM1), the integrated pest management plan (CIPM1), the soil management plan (CSAM1) and the moorland assessment (CMOR1). While these actions were popular with applicants — some had very high uptake — Defra argues they did not deliver direct environmental benefits and therefore offered poor value for public money. The message is clear: the government is prioritising actions that deliver measurable outcomes on the ground.
What remains covers 14 broad themes: agroforestry, boundary features, buffer strips, farmland wildlife on arable and grassland, heritage, integrated pest management, moorland, nutrient management, organic, precision farming, species recovery, soil health, and waterbodies. The diversity of the offer means that most farm types — from upland graziers to horticultural producers to organic converters — should find relevant actions.
Who Can Apply, and When?
The scheme will operate through two application windows, and eligibility for each is carefully defined. To apply at all, a farm must have at least three hectares of agricultural land — a threshold set partly in response to the recommendations made by Baroness Batters in her Farming Profitability Review.
Window 1 opens in June 2026 and is reserved for two groups: small farms (defined as those with up to 50 hectares of agricultural land) and farms that do not currently hold an RPA-administered Environmental Land Management revenue agreement. This includes farms without existing SFI, Countryside Stewardship Mid Tier or Higher Tier, or Higher Level Stewardship agreements. Small farms with existing ELM agreements are also eligible to apply in Window 1.
The window will remain open for approximately two months, though it may close sooner if demand is high and the allocated budget is used up. Window 2 follows in September 2026, open to all farms meeting the minimum land threshold. Farmers are advised to plan ahead and monitor Defra’s communications closely, as budget limits could curtail the earlier window unexpectedly.
New Caps and Limits: Spreading Funding More Widely
Perhaps the most significant structural change is the introduction of an annual agreement cap of £100,000. No single SFI26 agreement may be worth more than this sum per year, and each farm business may hold only one SFI26 agreement. Defra is explicit that the purpose of these measures is to redistribute funding so that a greater number of farms can benefit — the ambition is to double the number of farms delivering for wildlife by December 2030, compared with 2025 levels.
There are also new restrictions on rotational actions. Farmers will not be able to increase the area or value of rotational actions beyond what they include in Year 1 of their agreement, though they can move such actions between fields to accommodate their crop rotation, and they can reduce and return to the Year 1 level in subsequent years. The intent is to prevent agreements from expanding significantly after the initial application.
Additionally, a group of ten actions that remove land from productive use — including pollen and nectar mixes, winter bird food strips, grassy field corners, and the newly area-capped enhanced overwinter stubble — may not collectively exceed 25% of a farm’s total agricultural area. This rule is designed to protect food production by preventing too much farmland from being taken out of cultivation.
Payment Rates: Winners and Losers
Payment rates have been reviewed across the board, and the direction of travel varies considerably depending on the action. Upland farmers will welcome meaningful increases to moorland grazing and shepherding payments. The moderate livestock grazing rate (UPL1) rises from £20 to £35 per hectare, low livestock grazing (UPL2) increases from £53 to £89 per hectare, and limited livestock grazing (UPL3) jumps from £66 to £111 per hectare. Shepherding rates have also risen substantially. Crucially, these uplifts apply to existing SFI agreements as well as new SFI26 ones — recognition, says Defra, of the economic pressures upland farmers have faced following changes in livestock prices.
By contrast, three actions are seeing payment reductions. Herbal leys (CSAM3) will fall from £382 to £224 per hectare, winter bird food on arable land (CAHL2) drops from £853 to £648 per hectare, and legume fallow (CNUM3) reduces from £593 to £532 per hectare. Defra says the original rates for these actions were simply set too high, making it overly attractive for farmers to take highly productive land out of food production. The reductions are intended to recalibrate the incentive without eliminating it entirely. Importantly, existing SFI23 and SFI24 agreements will not be affected — the cuts only apply to new SFI26 agreements.
The SFI management payment — a flat top-up introduced to smooth the transition into the scheme — will not be offered under SFI26. It was always described as time-limited, and its removal is intended to release more budget for actual agreement payments.
Other Structural Changes Worth Noting
Two other changes are worth highlighting for tenant farmers and those planning longer commitments. First, actions that previously ran for five years will become three-year actions under SFI26. This is a deliberate move to make the scheme more accessible to short-term tenants who may be reluctant to commit to longer agreement periods. Second, supplemental actions — those which build on a ‘base’ action to deliver more targeted outcomes — can only be applied for alongside their corresponding base action, in the same agreement and at the same time. Defra says this aligns their timescales and improves both value for money and environmental outcomes.
What Comes Next?
Full guidance for SFI26 will be published before Window 1 opens in June, and Defra has committed to publishing the budget for the first window at that point. The department also says it will provide clear updates as funding is committed in each window, offering farmers and their advisers more visibility over scheme finances in real time — a response to longstanding concerns about applications being submitted without certainty over funding availability.
Defra has described the core design of SFI26 as a stable framework for the rest of this Parliament, though it expects to make refinements where possible. For farmers, advisers and land managers, the message is to begin planning now: study the 71 available actions, assess which fit your farm system, and be ready for the June opening if you qualify for Window 1. The clock is ticking.
