Defra drought package omits hardship payments

Defra has confirmed its £65m drought package will not include targeted hardship payments for farmers suffering the greatest losses, while the £50m boost to the Sustainable Farming Incentive 2026 will be open to all eligible English farmers.

The department has also confirmed there will be no relaxation of the £100,000 annual Sustainable Farming Incentive 2026 (SFI26) agreement cap, despite larger businesses potentially facing significant drought-related losses.

The package includes £50m extra for SFI26 Window Two, due to open in September, taking its total budget to £290m, and up to £15m for on-farm reservoirs through the Water Management Grant.

See also: Farmers Weekly Podcast Ep 317: Defra unveils £65m drought package

Defra said the £65m was unallocated within its existing farming budget and would not require cuts to existing commitments.

It explained the additional funding for SFI26 was being presented as drought support because its measures can improve soil health and water retention over the three-year agreements.

However, unlike previous flood-hit farms in 2023-24, there will be no direct drought hardship payment.

Defra said its approach was to provide practical help while investing in longer-term resilience, rather than returning to direct subsidy-style payments.

For livestock farmers, the most immediate support remains temporary Environmental Land Management flexibilities.

Farmers can cut and graze land within agreements where drought is causing shortages of forage, grazing or bedding, without affecting their payments.

All counties in England met the drought or prolonged dry weather criteria as of 15 August.

Funding for reservoirs

Defra expects the reopened £15m Water Management Grant to support around 100 farms, with the scheme due to open in autumn.

It said the budget could be increased if demand exceeds available funding.

The government is also promising planning and regulatory changes, including updated guidance on farm reservoirs and work with the Environment Agency to simplify applications for long-duration abstraction licences.

Funding levels questioned

But Jeremy Moody, secretary and adviser at the Central Association of Agricultural Valuers, said the funding would not immediately change the position for most farms.

He questioned whether enough farmers would have viable projects ready to benefit from the grant.

“The £15m is only useful if there are actual live proposals to build,” he said.

Mr Moody warned that planning, environmental assessment and abstraction hurdles remained significant. 

Defra said it would continue monitoring conditions and consider further action if necessary.