Farming budget slashed as Defra fine print reveals cuts

Defra’s Farming and Countryside Programme budget will drop sharply to £2.32bn in 2026-27, as more details emerge following chancellor Rachel Reeves’ Spending Review.

Analysis by consultancy firm Andersons suggest this represents roughly a £280m fall compared with an estimated farming budget of £2.6bn for 2025-26.

A further £50m cut is planned to the Farming and Countryside Programme in 2027-28, followed by a £20m cut in 2028-29.

Richard King, partner and head of business research at Andersons, called for more clarity around the allocation of funds between the Sustainable Farming Incentive (SFI) and existing Countryside Stewardship schemes.

See also: Spending Review: Defra funding higher than expected

Nature schemes

The addition of £450m/year through nature schemes will top up the total Defra farming and nature budget to £2.77bn in 2026-27, but clarity is yet to be provided on what these schemes entail.

Mr King said: “There is a bit of a question mark about the nature schemes.

“[Defra] seems to be using that money to top it up to an amount that industry is happy with, but all of that seems incredibly unclear to us about what exactly that is going to fund.

“Will farmers be able to get hold of it? Will they still be farming if they sign up to those schemes? It is still all very vague.”

Grants and payments

The budget for productivity, innovation and transition, which covers grant funding schemes such as The Farming Equipment and Technology Fund, is also set to be cut.

Funding will drop to £350m in the first year (2026-27), £300m in the second year, and to £250m in the third year.

Country Land and Business Association (CLA) president Victoria Vyvyan said:

“The reduction in productivity investment over the next three years will risk dampening investment, at a time when businesses need to look at new technology and equipment to drive efficiencies and improve environmental sustainability.”

Meanwhile, delinked payments are being hit with a 98% reduction on the first £30,000 reference amount, and a 100% cut thereafter, effectively limiting payments to just £600 a farm compared with £7,300 this year.

Some reductions in delinked payments were anticipated, however this substantial fall will leave many businesses thousands of pounds worse off than budgeted.

Mixed reaction

Such sharp falls in delinked payments were expected, but nonetheless unwelcome, according to Ms Vyvyan.

She said: “It will hit especially hard those whose profit margins are now cut to the bone.

“While there might be a consolation that the new SFI 2026 scheme could be ready for applications in spring 2026, there is as yet no clarity on what that will look like and who will have access to it.”

Sarah Baker, head of economics at AHDB, suggested that despite a cut in overall Defra spending, there is a strong emphasis on sustainable farming and nature recovery.

Meanwhile, Dr Jason Beedell, rural research director at Strutt & Parker, called the figures relatively positive, compared with the potential cuts that were rumoured ahead of the spending review.

But he conceded there was still not a great deal of clarity on how funding will be split between the different environmental land management schemes.

He said: “It feels like quite a major rewiring of farming and land use going on at the moment.

“It does feel like the government is at least trying to put in place strategies and plans which we haven’t had for at least 10 years.”