SFI 2026 Changes 'Won't Deliver Environmental Gains'

"Changes to the SFI scheme may allow the Government's budget to stretch, but they are unlikely to help farmers deliver significant environmental gains." Says David Morley, Environment & Conservation Manager at H&H Land & Estates

At the NFU Conference on Tuesday 23^rd February, Environment Secretary Emma Reynolds confirmed that the Sustainable Farming Incentive (SFI), which replaced EU subsidies following Brexit, will reopen in June 2026, having been closed with little warning in March 2025.

Addressing delegates, she explained that the revised scheme will be smaller than its previous iteration, with the number of paid environmental actions reduced from 102 to 71.

Here, David Morley examines the changes in more detail and considers their likely impact on farming businesses.

The SFI has been closed since March 2025 pending a revamp and the Government has now published further detail ahead of the SFI 2026 launch.

Key changes include:

• The number of actions reduced from 102 to 71
• A total income cap of £100,000 per year
• Some payment rates lowered, while a small number have increased
• All actions now fixed at three years (previously some were five years)
• Each business limited to one SFI 2026 application
• The Management Payment (£20/ha for up to 50ha) removed
• Rotational actions cannot increase in area beyond the Year 1 level

"There have been too many changes to this scheme," says David Morley. "Farmers need stability and clarity to plan effectively. Continual revisions undermine confidence, particularly when agreements run for multiple years."

In 2026 there will be two application windows: 

• June – open to farms under 50ha and those not already in other Government-funded schemes (except Landscape Recovery).
• September – open to all applicants.

The June window is expected to last around two months, although it could close sooner if uptake is high. The September window will remain open only until the allocated budget is exhausted.

"This means that farmers currently in Mid-Tier agreements finishing at the end of this year, including those extended by 12 months, may well miss out," warns David. "The same applies to those with SFI agreements ending later in 2026 or early 2027. To enable farmers to plan, it is really important that the scheme is open for more than a few weeks each year."

Several moorland actions will see significant payment increases, reflecting the need to better compensate farmers for reductions in sheep numbers amid higher livestock prices. These increases will be retrospectively applied to existing agreements from the 2026 payment year.

However, several actions have been removed:

• UPL7 (shepherding with no livestock removal) has been dropped.
• UPL4 has also been removed, meaning payments for grazing cattle and ponies on moorland are now only available where at least 70% of livestock units are cattle or ponies.

"This seems a shame," says David, "it is rarely practical to graze unenclosed moorland with such a high proportion of cattle or ponies, so the change will disincentivise their introduction."

The CMOR1 moorland surveying action, which supported commoners and moorland managers in recording environmental data, has also been removed.

"This action has been invaluable in helping farmers understand and enhance the public goods they deliver – biodiversity, water quality, carbon storage, flood mitigation and historic features," David explains. "DEFRA says it delivered poor value for money, but the benefits cannot be judged in purely monetary terms. Its removal is a missed opportunity to improve engagement between farmers and Natural England."

Three widely used and popular options have seen payment reductions:

1. CSAM3 Herbal leys – reduced from £382/ha to £224/ha
2. CAHL2 Winter bird food – reduced from £853/ha to £648/ha
3. CNUM3 Legume fallow – reduced from £593/ha to £532/ha

These changes will not apply retrospectively to existing agreements.

DEFRA's position is that original payment rates were too generous and encouraged land to be taken out of production. However, David believes alternative measures would have been more effective.

"Area limits or block size restrictions, particularly for winter bird food, would have targeted environmental delivery more effectively without undermining uptake. The reduced payments now fail to reflect the genuine environmental value of these options."

Actions designed to support farm planning have been dropped entirely, including:

• CSAM1 – Soil testing and management plan
• CNUM1 – Nutrient management plan
• CIPM1 – Integrated pest management plan

"In most cases, farmers need to undertake this work to meet baseline legislative requirements anyway," David says. "There is little justification for additional payment."

The only "endorsed" SFI action requiring Natural England approval – GRH6 Management of species-rich grassland – has also been removed. Any farmer now wishing to manage species-rich grassland must now apply through Higher Tier Countryside Stewardship.

"Given the well-documented challenges in accessing Higher Tier, there is now a real risk that priority grasslands will instead be entered into other SFI actions that are not appropriate," David warns.

Additional changes include removal of:

• GRH11 cattle grazing supplement
• SPM2 and SPM4 supplements for 50–80% native breed grazing

Payments for grazing more than 80% native breeds remain.

"This risks reducing support for native breeds, especially on common land or shared grazing" he adds.

David concludes, "Overall, the changes to the scheme do not represent meaningful simplification. They have resulted in the removal of, or reduced payment for, several important actions. While this may allow the Government's budget to stretch a little further, it is unlikely to help farmers deliver the significant environmental gains that are needed across the country.

"If Government is serious about environmental delivery, schemes must be practical, properly funded and above all, stable. Farmers need confidence to commit for the long term."