The Sustainable Farming Incentive 2026 (SFI26) represents a recalibration of the scheme rather than a wholesale redesign. With fewer actions, revised payment rates and new agreement caps, the emphasis is clearly on simplifying delivery, spreading budget more widely and ensuring environmental actions sit alongside productive farming. Below, we set out the confirmed scheme structure, what has changed since SFI24, and the practical implications members should consider when planning their next agreement.
Here’s a summary of the key points:
1️⃣ SFI26: Simpler Structure, Fewer Actions
SFI26 has been streamlined:
- 71 actions available (down from 102 in SFI24)
- 31 actions removed (around one-third of the previous offer)
- Focus on higher value-for-money actions
- Reduced complexity
The government states that actions with:
- Low uptake
- Low environmental return
- Or limited contribution to food production
have been removed.
The core scheme design is expected to remain stable for the rest of this Parliament, although refinements are likely.
2️⃣ Application Windows
✅ Eligibility
To apply for SFI26 (Windows 1 or 2), farms must have:
- At least 3 hectares of agricultural land
This threshold follows recommendations from the Farming Profitability Review.
Window 1 – June 2026
- Open for around 2 months
- May close early if fully allocated
- Open to:
- Small farms (≤50ha)
- Farms without an existing ELM revenue agreement
Window 2 – September 2026
- Open to all farms
- No fixed end date (depends on demand)
3️⃣ New Scheme Limits
Several caps have been introduced:
£100,000 Annual Agreement Cap
- No SFI26 agreement can exceed £100,000 per year
- Only one SFI26 agreement per farm business
This is intended to spread funding across more holdings.
Rotational Action Cap
- You cannot exceed your Year 1 rotational area
- Areas can move between fields
- You can reduce area in future years
- But you cannot increase beyond Year 1 levels
Example:
- Year 1: 10ha
- Year 2: 5ha
- Year 3: 10ha
- You cannot exceed 10ha.
Enhanced Overwinter Stubble (AHW7) Cap
Enhanced overwinter stubble is now included in the 25% maximum land cap (shared across 10 actions).
This is designed to prevent excessive land being taken out of production.
4️⃣ Payment Changes
Payment Increases (Moorland)
Five moorland grazing and shepherding rates have increased substantially, including:
- Moderate grazing: £20 → £35/ha
- Low grazing: £53 → £89/ha
- Limited grazing: £66 → £111/ha
These increases will apply to existing SFI agreements as well as new SFI26 agreements.
Payment Reductions (New SFI26 Agreements Only)
Rates reduced for:
- Herbal leys (CSAM3)
£382 → £224/ha - Winter bird food (CAHL2)
£853 → £648/ha - Legume fallow (CNUM3)
£593 → £532/ha
The rationale given is that previous rates were set too high and risked drawing productive land out of food production.
⚠️ These reductions are not retrospective and will not affect SFI23 or SFI24 agreements.
5️⃣ Planning & “Assessment” Actions Removed
A clear theme in SFI26 is the removal of planning-only actions that did not deliver direct environmental outcomes.
Removed actions include:
- IPM plans
- Nutrient management assessments
- Soil management plans
- Hedgerow condition assessments
- Moorland assessments
The SFI management payment has also been withdrawn.
6️⃣ 5-Year Actions Now 3-Year
All 5-year actions will move to 3-year agreements.
This is intended to:
- Simplify the scheme
- Improve accessibility for tenant farmers
7️⃣ Base + Supplemental Rule
Where actions have a base and supplemental element:
- You must apply for both together
- They must be in the same agreement
- Supplemental actions cannot stand alone
8️⃣ Key Themes in SFI26
The 71 actions are grouped across:
- Agroforestry
- Boundary features
- Buffer strips
- Farmland wildlife (arable & grassland)
- Heritage
- Integrated Pest Management
- Moorland
- Nutrient management
- Organic
- Precision farming
- Soil health
- Species recovery
- Waterbodies
The government has prioritised actions that:
- Contribute strongly to water quality
- Deliver biodiversity gains
- Offer value for money
- Support sustainable food production
A key stated ambition is to double the number of farms delivering year-round wildlife resources by 2030 (compared to 2025 levels).
What This Means for farmers
Opportunities:
- Continued support for soil health, IPM, buffer strips and wildlife actions
- Improved moorland payments
- More certainty over scheme structure
Watchpoints:
- Lower rates for herbal leys and winter bird food
- £100k agreement cap
- Year 1 ceiling on rotational actions
- No management payment
Farmers considering applying in Window 1 should begin:
- Reviewing current rotational plans
- Modelling payment impacts under revised rates
- Assessing interaction with existing ELM agreements
To read the full DEFRA farming blog update please use the following link:
https://defrafarming.blog.gov.uk/2026/02/24/sfi26-details-definitions-and-what-to-expect/