- England’s new Sustainable Farming Incentive 2026 (SFI26) will open for applications on 30 June 2026 for small farms and those without existing Environmental Land Management (ELM) revenue agreements, with a second application window in September 2026.
- SFI26 has a budget of £240 million for new agreements. Up to £60 million is allocated to the first window; unspent funds roll over to the second window.
- The scheme pays farmers for actions that improve soil health, reduce fertiliser use, protect waterways and enhance habitats for wildlife. Agreements will run for three years and include a new £100,000 annual cap to ensure small farms are not crowded out.
Britain’s farmers have long complained that subsidy reforms are confusing and bureaucratic. The Department for Environment, Food and Rural Affairs (DEFRA) hopes to change that narrative with the Sustainable Farming Incentive 2026, a new scheme designed to reward environmental stewardship while keeping food production viable.
Launching on 30 June, SFI26 aims to allocate £240 million in its first year, paying farmers to improve soil health, cut fertiliser use and create habitats for wildlife.
It is the latest pillar of the government’s post‑Brexit land‑management reforms and reflects lessons learned from previous programmes that were criticised for complexity and inequity.
Simplification and fairness
SFI26 replaces several overlapping Environmental Land Management options with a streamlined menu of actions. Farmers can choose from tasks such as planting cover crops, reducing chemical inputs, managing hedgerows, testing soil organic matter and creating field margins. Each action carries a fixed payment rate per hectare.
Crucially, the scheme caps total annual payments at £100,000 to prevent large estates from absorbing the lion’s share of funds. DEFRA says this will free up money for small and family‑run farms, which have often struggled to compete for environmental subsidies.
To encourage early uptake, the first application window is open only to farmers registered with the Rural Payments Agency by 1 January 2026 and either operating less than 20 hectares or lacking an existing ELM revenue agreement. Larger farmers and those with current agreements must wait until the September window.
Up to £60 million of the budget is allocated to the initial window, with any surplus rolling into the second round. DEFRA officials say this staged approach ensures that smaller producers do not lose out to more professional grant writers.
Environmental ambition
SFI26 reflects a shift from paying for acres farmed to paying for outcomes. Applicants must commit to actions that improve soils and biodiversity while reducing pollution; for example, farmers can earn payments for integrating legumes and cover crops into rotations, reducing nitrogen fertiliser by specific percentages, or restoring riparian buffers to protect waterways.
Payments for actions like agroforestry and wetland creation are higher to reflect their complexity. The scheme also dovetails with the government’s Environmental Improvement Plan, which aims to halve nutrient pollution and stop the decline of species.
The scheme includes at least £50 million for Countryside Stewardship Higher Tier agreements, which fund ambitious habitat creation and restoration projects. Farmers in Higher Tier can simultaneously join SFI26 for actions not covered by their existing agreements, making the programmes more complementary.
DEFRA emphasises that SFI26 will support the farming industry’s transition to regenerative practices, helping to maintain soil fertility and crop yields while reducing reliance on imported fertilisers and pesticides.
Competing objectives
The farming sector sits at the nexus of Britain’s climate, nature and food security objectives. Agriculture accounts for about 10% of UK greenhouse gas emissions and is a major source of nitrogen pollution and biodiversity loss.
At the same time, farmers produce more than half of the food consumed in the UK. Reconciling these objectives requires policies that reward environmental services without undermining farm profitability.
SFI26 is part of a broader £2.4 billion annual agriculture budget that aims to transition England away from the EU’s Common Agricultural Policy. Wales and Scotland are developing similar but distinct schemes. The government says the latest iteration maximises the benefits of the net‑zero transition while supporting rural economies.
For UK supply chains, the scheme signals a continued move toward more sustainable farming, while retailers and food processors will need to adapt to changes in crop rotations and supply patterns.
If successful, SFI26 could become a model for combining food security with climate ambition. If it stumbles, it could fuel scepticism about the government’s commitment to farmers. Either way, the programme underscores that the future of farming lies not only in yields but also in soil health, carbon sequestration and biodiversity.
