Sustainable farming incentive closed for new applications

Following its decision to cut the Basic Payment Scheme harder and faster than expected, the immediate withdrawal of the SFI scheme, promoted to help offset those cuts, comes as a body blow to many businesses. Results from a recent National Farmers Union survey showed farm business confidence is at an all-time low. Defra’s latest action will not help to build back the confidence and trust in government policy so badly needed in the farming industry if it is to engage and move forward positively.

Defra says over 37,000 SFI agreements are currently in place. 800,000 hectares of arable land is now farmed without insecticides, 280,000 hectares of low input grassland is being managed more sustainably and 75,000 kilometres of hedgerows are actively managed. 

While Defra has confirmed a reformed version of SFI is on the horizon, details will be provided following the Spending Review. Therefore we will have to wait until summer 2025 for the next version, although we know it won’t be open for applications until 2026.

What we know so far

• Current holders of SFI agreements will continue to receive payments as per the terms of their agreement – in some cases for up to three years.
• If an applicant has been offered an SFI agreement but has yet to accept, this will need to be accepted in the next ten working days (starting from 11 March), or the offer will be withdrawn.
• If an application for an SFI agreement was submitted before applications were closed, but an offer had not yet been received, an agreement will still be offered if the application is deemed eligible.
• Any applications that were in progress but not submitted before the scheme was closed will not be eligible for submission. The exceptions are: applications that were delayed due to systems failure, those who requested “assisted digital” support from the RPA, and ex-SFI pilot farmers, whose pilot agreement has ended but they haven’t yet applied for the full SFI24 offer on land which was in the pilot agreement.
• Those with active SFI pilot agreements will be able to apply for SFI24 once their agreement has ended.

Defra has set out how the £5 billion farming budget is spent over a two-year period. Despite being promoted as Defra’s flagship scheme, SFI receives 21% of the budget (£1.05 billion), with the largest slice apportioned to Higher Level Stewardship and Countryside Stewardship agreements. Recent announcements confirmed that capital grants will be opening again this summer and Defra is continuing to invest in the Farming Innovation Programme (FIP) and the Farming Equipment and Technology Fund (FETF).

Potential impact

The cessation of the SFI24 may encourage many farmers to review business plans and current land use, and choose to switch some or all activity from environmental protection and recovery back to agriculture in order to maximise output and fill the funding gap. One farmer who was waiting to liaise with his agronomist before pressing send on an application is now looking at taking 70 hectares of land used for environmental protection and recovery and returning it to arable cropping. 

The future

The previous government was working on mobilising green investment with the 2023 Green Finance Strategy, which confirmed that in order to achieve environmental targets and decarbonisation by 2050 (at the time of the strategy), this would require “a step change in levels of investment”. We therefore need to understand where Defra is in continuing this work to mobilise green investment – an opportunity to really engage private finance in the sector.

While we wait for more detail around exemptions and current applications and what SFI25 will look like, we ask Defra to bear in mind the collaboration and co-operation required with the farming community for the successful development of frameworks and strategies due out later this year: the National Food Strategy, Land Use Framework and the 25-year Farming Roadmap. These strategies and frameworks could provide the direction of travel the industry needs to start rebuilding that lost confidence and driving forward a flourishing and thriving sector.

Further information

Contact Kelly Hewson-Fisher or Andrew Wraith

Government announcement

Defra blog: The SFI story so far

Defra blog: Update on the farming budget