SFI26: What Agricultural Practitioners Need to Know
The Department for Environment, Food and Rural Affairs has published further details on the Sustainable Farming Incentive 2026 (SFI26). The announcement on 24 February 2026 can be found here. The headline is that this is a leaner, more streamlined scheme. There are two application windows, the first opening in June 2026, so now is the time for farm businesses and their advisers to understand the key changes and plan accordingly.
A Leaner Scheme
SFI26 is intended to be simpler than the SFI24 offer. The number of available actions has been reduced from 102 under SFI24 to 71, with DEFRA removing actions that demonstrated low uptake, poor value for money, or failed to deliver direct environmental outcomes. Among those removed are several planning and assessment actions, including CHRW1, CIPM1 and CMOR1, which had moderate to high uptake, but which did not produce tangible direct environmental benefits so are seen as poor value for money.
The retained actions span 14 themes, covering agroforestry, boundary features, buffer strips, farmland wildlife, moorland management, organic farming, precision agriculture, and soil health. DEFRA has indicated that priority has been given to actions offering strong value for money and contributing to Environmental Improvement Plan targets for water quality and biodiversity.
Eligibility and Application Windows
A notable change concerns eligibility thresholds. Following the recommendations in Baroness Batters' Farming Profitability Review, applicants must now hold at least 3 hectares of agricultural land to qualify for SFI26. This addresses Baroness Batters’ recommendation (recommendation 6) that the “Active Farmer Principle” should be applied to SFI to help ensure that scheme investment is targeted at farming rather than to developers or to landowners more widely.
The application process will operate across two windows. Window 1 opens in June 2026 and is reserved for small farms (those with up to 50 hectares) and farms without an existing Environmental Land Management revenue agreement. Window 2 follows in September 2026 and will be open to all eligible farms. This phased approach appears designed to manage administrative capacity whilst providing earlier access for smaller enterprises.
Financial Caps and Limitations
SFI26 introduces several new financial and structural constraints that farm businesses must factor into their planning. Each farm business may hold only one SFI26 agreement, and annual payments are capped at £100,000 per year. For larger estates or farming enterprises, this cap may necessitate careful prioritisation of actions to maximise environmental and financial outcomes within the permitted ceiling.
The SFI management payment, which previously provided a contribution towards the administrative burden of participation, has been removed entirely. DEFRA’s explanation is that the management payment was always intended to be time-limited payment to support farmers transitioning into the new scheme.
Rotational actions are now subject to area restrictions, with participants unable to increase the area beyond Year 1 levels. Additionally, enhanced overwinter stubble (AHW7) has been added to the 25% area limit cap, which already covers 10 other actions.
Payment Rate Adjustments
DEFRA has revised payment rates across several actions, with changes flowing in both directions. Upland and moorland actions have seen welcome increases: moorland grazing actions (UPL1–3) have been significantly uplifted, with UPL1 rising from £20 per hectare to £35 per hectare, and shepherding actions (UPL8, UPL10) have also increased substantially. These increases will apply to both existing and new agreements.
Conversely, several popular actions will see reduced rates for new SFI26 agreements. Herbal leys (CSAM3) fall from £382 per hectare to £224 per hectare, winter bird food (CAHL2) reduces from £853 per hectare to £648 per hectare, and legume fallow (CNUM3) decreases from £593 per hectare to £532 per hectare. Existing agreement holders will be protected from these reductions, but those entering new agreements must factor the revised rates into their financial planning.
Improved Accessibility for Tenants
One positive development concerns agreement duration. Actions that previously required a 5-year commitment have been converted to 3-year terms. This change should improve accessibility for tenant farmers operating under shorter FBTs, who may previously have been unable to commit to longer-term obligations. It also provides greater flexibility for landowners and managers whose circumstances may change over the medium term.
A further structural change requires base and supplemental actions to be applied for together within the same agreement, rather than permitting supplemental actions to be added subsequently. Advisers should ensure that clients' applications are comprehensive from the outset.
Practical Considerations
For agricultural practitioners advising farm clients, SFI26 demands a fresh appraisal of environmental scheme participation. The removal of certain actions, revised payment rates, and new eligibility thresholds mean that assumptions based on SFI24 may no longer hold. Particular attention should be paid to the annual cap for larger holdings, the removal of the management payment, and the reduced rates for herbal leys and winter bird food options.
Tenant farmers and their landlords should welcome the move to 3-year commitments, though the requirement to hold at least 3 hectares will exclude some smallholders. The phased application windows provide an opportunity for smaller farms to secure agreements before the scheme opens to larger competitors in September.
As always, early engagement with the Rural Payments Agency guidance and, where appropriate, independent agronomic and legal advice will be essential to ensure that farm businesses optimise their participation in SFI26.
Field Notes is Charles Russell Speechlys’ weekly agricultural law blog, sharing plain-English insight into the legal and policy issues affecting agriculture, agricultural land and rural business life. From hints and tips on avoiding agricultural disputes, pitfalls to keep an eye out when planning for tenancy or family agri-business succession, to the latest agricultural legislative or policy changes and the most interesting farm-related court decisions, Field Notes makes the complex more understandable, always grounded in the realities of life on (and off) the land.
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