SFI 2026 – What are the next steps for arable businesses?

Agrovista’s Lewis Butlin assesses the key points of the revamped SFI scheme due to be introduced later this year and offers some timely advice as the application windows approach.

The Sustainable Farming Incentive (SFI) was launched four years ago as part of a suite of measures introduced to replace direct support to farm businesses under the Basic Payment Scheme.

Lewis Butlin © Agrovista Rural Consultancy

SFI required farmers to undertake various sustainable farming practices that benefited the environment while supporting food production.

It was always meant to be a continually evolving scheme, farmer led and driven so that claimants could complete and manage their agreement on their own, at a level of engagement to suit their particular business.

But SFI has had a chequered history from the beginning. The Rural Payments Agency launched it in early 2022, two years before its original start date as pressure mounted to compensate farmers for reductions in BPS payments that had begun the previous year.

The pilot scheme had only been in place for six months. It hardly had a chance to get going, let alone assess the effectiveness and suitability of the scheme.

But the RPA launched the full scheme anyway, in the same format as the pilot, not appreciating the flaws that were already apparent to those involved.

A revised scheme followed in August 2023. This was a completely different concept, consisting of pick-and-mix options that farmers and landowners could choose as they saw fit, as long as they met the aims of those actions.

SFI 2023 was probably the best version of the scheme. It included some next-level “cross-compliance” options that encouraged good agricultural management, including soil sampling, nutrient and soil management plans and Integrated Pest Management (IPM).

This was coupled with some important land management options such as grass buffer strips, companion crops, winter cover crops, pollen and nectar, wild bird seed, low input grassland and herbal leys.

Unfortunately SFI 2023 was short lived. It was pulled in favour of the Extended Offer for SFI 2024, which included 79 options from Countryside Stewardship (CS).

But the replacement scheme’s launch followed a dismal harvest and an appalling autumn with little crop in the ground, which triggered a huge uptake of options that were never meant to be implemented in that way. Not surprisingly, the limited budget soon disappeared.

Lewis Butlin © Agrovista Rural Consultancy

SFI 2026

Twelve months after the scheme was pulled with little to no notice, we are still waiting for the next version to open for applications.

The good news is that SFI 2026 will be available for small farms in June. There is still no confirmation of the exact definition of a small farm, but it is likely to be less than 50ha.

Larger farms not in any current RPA-led land management schemes (including Environmental Stewardship, CS or SFI) will also be able to apply from June.

The application window will be two months, although it could close sooner if demand is high or the budget set for this first stage is spent.

A second application window will open in September for all farms. How long this remains open will depend on demand and how long the allocated budget lasts.

There have been some key changes to SFI 2026. These include the removal of 31 options, some due to low uptake, others for not providing value for money or contributing sufficiently to the government’s Environmental Improvement Plan targets.

However, it is very disappointing to see that some of the very same options that made SFI 2023 so good have been axed, including soil sampling, nutrient planning, soil plans and IPM.

These options provided a huge amount of environmental awareness to farmers across the country. It encouraged them to closely examine their soils, to plan where nutrients and organic manures should be spread and to ensure these met crop requirements, meaning that nutrients were less likely to end up in watercourses.

Arguably this is part of the Farming Rules for Water (FRfW) Regulations and should be followed anyway, but SFI 2023 was a huge driver of compliance and provided good opportunities for farms to align with the regulations.

The introduction of a £100,000 agreement cap under SFI 2026, along with only one agreement per business, aims to spread the budget among more farming businesses.

The previous flexibility of increasing the action levels in subsequent years after application has been removed. Rotational options will no longer be able to go above what was applied for in year 1.

There is still flexibility to do less in year 2 and increase again in year 3, but not above what was selected in year 1.

Lewis Butlin © Agrovista Rural Consultancy

There are now 10 options that cannot, in total, account for more than 25% of a farm’s overall agricultural area. This is designed to avoid excessive amounts of land being taken out of production.

Payment rates have also been adjusted. Some moorland options are now worth more, whereas some of the more popular arable/rotational options including herbal leys, winter bird food and legume fallow are worth less.

Options affected by reduced payments are now more likely to be used only where needed and for longer, especially herbal leys.

These are worth just £224/ha compared with £382/ha previously. Given the cost of seed and establishment, their time in the ground will need to be extended to justify their inclusion in the new scheme.

As we head towards the two announced SFI 2026 windows, potential applicants should consider early what actions they are looking to take up and where, so they can prepare the paperwork in advance and submit it as soon as possible. We do not know how long the application windows will be open, or when subsequent windows will become available.

Farm businesses with existing SFI agreements ending in early 2027 or CS Mid-Tier agreements finishing at the end of 2026 should also prepare applications for submission during the September window, as it is being proposed that applicants can nominate their start date to allow for existing agreements to end before their new one starts.

Applications should not just be made to generate the most income, tempting though that might be given the current economics of crop production.

All SFI options need management and there are costs involved. Remember to weigh up the risk of failed SFI crop establishment and the subsequent cost of re-establishment, and to compare this to current costs of production for main arable crops as well as against a second wheat or a break crop.

Utilise options that provide agronomic benefit in their own right and look at the SFI as almost a bonus payment for doing what is right for your land and your business.

Remember that there is a lot of advice available within the sector. Talk with your trusted advisor or your agronomist and look to work together to design a scheme that is best for your business.

For more information email rural.consultancy@agrovista.co.uk or visit https://www.agrovista.co.uk/rural-consultancy-services