The CLA View

It was on 11 March 2025, a year to the day, that Defra took the decision to temporarily close the Sustainable Farming Incentive (SFI), a government-funded scheme in England that rewards farmers and land managers for farming practices that help produce food sustainably and protect the environment.

Defra stated the high uptake and budgetary restraints as the primary reasons for doing so. It was news that shook our industry, in part, due to the complete lack of communication prior to the announcement.

12 months on, and we are now beginning to better understand the future of the SFI and what the implications are for our members, who are a range of farmers, landowners, and rural businesses.

The CLA has worked closely with Defra over the last year to shape SFI26 in line with the needs of the industry and government environmental objectives.

Defa has confirmed the new SFI offer will include fewer 'actions', the specific environmental land‑management activities that farmers choose to carry out in return for payments. It also stated that there will be a financial cap on agreements with land managers of £100,000 per year.

Secretary of State Emma Reynolds confirmed the "simpler" scheme, will re-open in June to farms under 50 hectares and those without a live Environmental Land Management (ELM) agreement. A second application window will open to all farmers in September.

The move to application windows provides greater budgetary control for Defra which should be beneficial overall. However, it does still mean jeopardy for applicants as funding is still allocated on a first come, first served basis and, depending on the balance of demand and budget, not all applications will be funded.

The government commitment to ‘no more sudden closures’ does not guarantee that everyone will get funding. Its commitment is to update potential applicants on budget allocation progress, including when the budget is close to being exhausted. The move to application windows does create problems for those with existing agreements with expiry dates that misalign with the SFI26 windows.

The CLA has been cautious in its response to the news. We are pleased Defra has listened to the CLA and industry to adapt the SFI scheme, increasing some payment rates and maintaining 71 actions, with a good spread to allow choice and flexibility for businesses.

But introducing a cap on payments has risks; limiting the ambitions of those that can do the most for nature. This is counterproductive when the government has legally binding environmental targets and some may have no choice but to intensify production.

In our region in the East, I have already spoken to numerous members who are concerned about what the cap will mean for their businesses. These are farming businesses that are prioritising nature and the environment in their day-to day operations. They tell me the cap will seriously curtail their ability to enhance the environment, and will have a wider significant financial impact on their businesses.

Many farm businesses are facing some of the bleakest profitability conditions in a generation. The Basic Payment Scheme is virtually gone and SFI is an essential income stream to build business resilience and support sustainable food production. The SFI is not a subsidy, it is a financial payment for delivering environmental enhancements that benefit us all. SFI is a contract with government to supply those goods for which there is no functioning market. Government does not cap those businesses which provide us with the roads, hospitals and schools for the nation so I am unsure why the provision for nature should be different.

Of course, SFI26 is just one part of a complex picture of action needed across the government to enable the farming industry to invest, innovate and grow with confidence. The clarity we are now beginning to see from Defra will allow businesses to consider some short-term options as part of their longer-term planning. But we must ensure businesses are not held back from delivering the food, environmental and economic benefits we all want to see delivered.

We also need more certainty for those businesses whose Countryside Stewardship and previous SFI agreements expire in the near future.