Defra overhauls SFI with £100,000 cap and 71 actions

Defra secretary Emma Reynolds has unveiled a major reset of the Sustainable Farming Incentive (SFI) for England, capping annual payments at £100,000 and reducing the number of actions from 102 to 71 as part of a wider overhaul of farm policy.

Speaking at the NFU annual conference in Birmingham on Tuesday (24 February), Ms Reynolds said the changes respond to farmers’ calls for clarity and fairness, spreading funding more widely while supporting profitable food production.

“I am determined to give British farming the foundation it needs to grow. We want farm businesses that are productive, profitable and resilient,” she told delegates.

See also: Farmer Focus: SFI 2026 set to be a shadow of its former self

“We want to see more British food on more tables – here at home and around the world.

“And we want a countryside that is thriving – for wildlife, for communities, and for the families who have worked this land for generations.”

Windows

The new-look SFI 2026 is scheduled to open in two “windows” – one for small farmers and first-time applicants in June, and a more general application in September.

Agreements will be limited to one per farm, capped at £100,000/year, and shortened from five years to three, with the £50/ha management payment removed and that funding redirected to environmental actions.

Some 97% of current SFI agreement holders currently fall below the soon-to-be-introduced £100,000 cap.

Rotational actions can still move between fields but cannot expand beyond the land declared in the first year of an existing SFI agreement.

Payment rates will rise for moorland grazing and shepherding options, but fall for herbal leys, winter bird food, and legume fallow – the three most popular SFI actions in previous schemes.

Enhanced overwinter stubble will be restricted to 25% of land in combination.

Existing agreements will continue under current terms.

Actions that had previously lasted for five years will now last for three, to make the SFI more accessible for tenant farmers.

Budgets

Defra has stated that “clear budgets will be set for each window”.

This suggests funding will be allocated separately to prevent the first window from exhausting the entire SFI budget.

However, exact percentage splits between the June and September windows have not been published.

Alongside the SFI, Ms Reynolds confirmed £70m for the Farming Innovation Programme, £50m for the Farming Equipment and Technology Fund.

And up to £225m in Capital Grants opening in July 2026 for hedgerows, slurry storage, flood management, and livestock infrastructure. The total budget is 50% higher than last year.

She also confirmed that Animal Health and Welfare Reviews will be mandatory for cattle, sheep and pigs, marking a new requirement for these livestock sectors.

From this summer, Defra also plans to launch new poultry biosecurity reviews, delivered through grant-funded vet visits, to help tackle avian influenza.

She also announced the first meeting of the new Farming and Food Partnership Board in March.

Industry reaction

NFU president Tom Bradshaw said the revised SFI balances simpler processes with flexibility, keeping the key actions farmers and growers value.

“It’s good to see the recognition of the uplands by maintaining actions that support the much-loved landscapes in which they work.

“But we’ll need to work through the wider detail of the scheme,” he added.

Country Land and Business Association (CLA) president Gavin Lane welcomed the retention of 71 actions but cautioned the £100,000 cap could limit ambitions for nature.

“We are pleased Defra has listened to the CLA and industry to adapt the SFI scheme, increasing some payment rates and maintaining 71 actions,” he said. 

“SFI is an essential income stream to support resilience and food production.”

The Tenant Farmers Association (TFA) praised Ms Reynolds for addressing tenant farmer concerns.

TFA chief executive George Dunn said farmer fears of a “stripped back offering” had largely been addressed, with 71 options providing “a broad scope of opportunity”.

He welcomed the £100,000 cap and 25% limit on land earmarked for overwintered stubble.

But also stressed the need for budget transparency and a smooth transition from other environmental legacy schemes.

Green groups’ reaction

Martin Lines, chief executive of the Nature Friendly Farming Network (NFFN), said confirming the SFI as a foundation for the next three years provides “much-needed clarity and stability, giving farm businesses greater confidence to plan ahead”.

Alice Groom, the RSPB’s head of sustainable land use policy, welcomed the announcement as a “positive step” to stabilise the SFI and avoid another sudden closure of the scheme.

“Many key actions for wildlife have been retained, which is good news for nature-friendly farmers working hard to bring species back from the brink and create resilient food systems,” she said.