The SFI 2026 changes bring new payment rates, longer contract lengths and tighter integration with capital grants (£225m window). This guide covers what DEFRA’s plans mean in practical terms for UK farms.
SFI 2026 Changes: The Big Picture – More Certainty, More Options?
After years of vague promises and shifting goalposts (see our farming grants guide for the wider picture), DEFRA is trying to give farmers more certainty about what the Sustainable Farming Incentive (SFI) looks like beyond the current offer. The headline change is a multi-annual offer — contracts intended to run longer than the current three years. Trust on this is earned in delivery, not announcement, but if five- or eight-year contracts materialise, that changes the planning horizon significantly.
Now, anyone who’s been following this knows the SFI has been a bit of a moving target. What started as basic soil standards has blossomed into a much broader offer, and the 2026 plans suggest even more expansion. We’re talking about a bigger chunk of the ELM budget, aiming for £1 billion a year by 2028. That’s a significant pot of money, nearly double what we’ve seen dished out for SFI 2023. The hope, and Lord knows we need it, is for schemes that are genuinely accessible and well-funded, rather than designed by people who’ve never set foot on a sticky Cambridge clay field or battled Lancashire slugs.
DEFRA’s talking about fewer annual updates to existing SFI actions, which is a blessing after the dizzying array of add-ons we’ve had. Instead, they’re aiming for more ‘packaged’ offers, linking a few actions together to deliver a bigger environmental bang for their buck. Think ‘lowland peat management package’ or ‘whole farm biodiversity unit’. This could actually be helpful, pushing us towards more integrated farm management rather than just ticking isolated boxes. But the devil, as always, will be in the detail – specifically, the payment rates and how restrictive those packages are. Will they work for a mixed farm in Devon or only for massive arable operations in East Anglia? That remains to be seen.
Specifically, my gut feeling is they’re finally listening, albeit slowly, to the NFU and the Country Land and Business Association (CLA) to design something that’s less bureaucratic and more integrated. They’re making noises about linking SFI more closely with Countryside Stewardship Plus (CS+), and eventually merging them. That would be a sensible move, especially for those of us juggling multiple agreements. We need a single, coherent system, not a patchwork quilt of schemes that contradict each other. The aim is for a unified offer by 2028, but as we know, government timescales are often a fantasy.
Payment Rates and Contract Lengths: The SFI 2026 Changes We Need to See
The absolute crux of any scheme is the payment rate, isn’t it? Without decent payments, it’s just more work for less return. For SFI 2026, DEFRA has indicated a serious review of payment rates for all actions, with the intention of making them ‘attractive and fair’. Well, about time! The current SFI rates, while better than basic payment scheme (BPS) for some, still don’t always cover the actual cost and lost income for thorough environmental work. For instance, creating flower-rich margins (NUM1) at £673/hectare, or multi-species cover crops (SAM2) at £128/hectare, can be decent, but maintaining unproductive land still stings, especially with commodity prices as they are.
They’re talking about payments that properly compensate for income forgone and the full costs of delivery. That means factoring in things like machinery wear and tear, specialised seed mixes (which aren’t cheap, just ask anyone who’s bought a ‘Kings’ mixture recently), and the sheer amount of time involved. If they’re serious, we should see rates that perhaps nudge upwards by 10-15% on some of the more demanding actions. The NFU has been pushing hard for this, arguing that current payments are often just ‘part-payment’ for public goods and ‘full payment’ is what’s needed. I’d agree wholeheartedly with that.
But here’s the real kicker: contract length. A three-year SFI contract is barely enough time to establish some of these environmental features, let alone see the full benefit. Think about establishing new hedges or managing veteran trees – that’s a decade-long commitment, at least. DEFRA wants to move to a standard 5-year SFI agreement, with 8-year options for certain capital items or longer-term land use changes. This is excellent news. Knowing you’ve got five years of guaranteed income for an action means you can plan properly, invest in specialist equipment if needed (like a low disturbance subsoiler for SAM3 at £405/ha, or a dedicated grass harrow), or allocate specific areas of your farm with confidence.
Think about which SFI actions in place now — or being considered — would benefit most from a longer contract. Wildflower mixes establish better over five years than three, with less re-establishment pressure and more sustained habitat. Hedgerow management (HRW1 at £16/100m, HRW2 at £24/100m) and low-input grassland (IGL1 at £151/ha) both benefit from the longer planning horizon a five- or eight-year agreement permits. Longer contracts are what the sector has consistently asked for, and their arrival in SFI 2026 is a meaningful step toward durable environmental outcomes.
Integrating SFI, CS, and the Big Picture: A Unified ELM
One of the most frustrating features of the current scheme landscape is trying to make SFI, Countryside Stewardship (CS) and the various local grants talk to each other. DEFRA’s stated intent is to gradually simplify and integrate SFI and CS by 2026, with a complete merger by 2028 — and that cannot come soon enough for farms juggling multiple agreements. A typical operation today might hold an SFI agreement for soils, a CS agreement for hedges and ponds, and a separate Forestry Commission grant for woodland creation. It is a paperwork burden the sector has long called to be simplified.
The vision is for a single, unified ‘Land Management’ offer, with SFI providing the ‘baseline’ actions focusing on broad environmental delivery across the farm, and CS becoming specialist ‘plus’ options for targeted, higher-ambition work. This is how it should have been from the start. Imagine an application portal where you select actions, and the system flags if they overlap or contradict. That’s the dream, anyway. The current situation means careful planning to ensure you don’t double-fund actions, like combining SAM1 (low input arable) with a specific CS option that covers the same land parcel. It’s a headache that uses up valuable time better spent elsewhere.
So, what does this mean for us now? If you’re currently in CS, don’t just let it lapse. Look at how you can bridge the gap. We’re expecting a ‘smooth transition’ offer for those with expiring CS agreements to move into the new unified scheme. DEFRA’s confirmed that farmers won’t be left in the lurch if their CS agreement ends before the full ELM rollout. The goal is to avoid any gaps in payments, which is a relief. If you’ve got a CS Mid Tier agreement for just £15,000 this year, you’ll want to ensure you can continue to claim similar payments under the new structure or easily swap to equivalent SFI actions.
Specifically, my advice here is to map out your current agreements: what land is covered, what are you getting paid, and what environmental benefits are you delivering? Start identifying which SFI actions might align with expiring CS options. If you’ve got dedicated winter bird food areas (AB9 in CS at £640/ha), look at the AB1 options in SFI. This preparation will make the transition much smoother when the full SFI 2026 changes come into force. Don’t wait for DEFRA to hand-hold you; get ahead of the game.
More Choice and Flexibility: Tailoring SFI to Your Farm
DEFRA’s also promising ‘more actions and greater choice’ as part of the SFI 2026 changes. We’ve seen the SFI offer grow substantially since 2023, expanding from soils and hedgerows to include actions for integrated pest management, nutrient management, farmland wildlife, and flood mitigation. The plan is to continue this expansion, particularly in areas like agroforestry, water quality improvements beyond basic nutrient management, and whole-farm biodiversity planning. This is excellent news for those of us wanting to genuinely integrate environmental work into our farming system, not just treat it as an add-on.
They’re aiming for a flexible ‘pick and mix’ approach, where farmers can choose actions that genuinely fit their farm’s specific context, soil types, and local environmental needs. This moves away from a one-size-fits-all approach and gives us farmers more autonomy. Imagine being able to select specific actions that directly address water quality issues prevalent in, say, the River Wye catchment, rather than generic low-input options. We’re also hearing talk of ‘innovative approaches’ to SFI, potentially including options for carbon sequestration in pastures, or even payments for reduced synthetic fertiliser use beyond current nutrient management plan requirements. This would be a welcome departure from some of the more prescriptive measures we’ve seen in the past.
But, and there’s always a ‘but’, this flexibility needs to be matched with clear guidance and practical advice. We don’t want to dig ourselves into a hole by choosing actions that look good on paper but are impractical on the ground. For example, if they expand massively into agroforestry options (something like a £400/ha payment for silvopasture), the guidance around tree species, spacing, and grazing management needs to be strong, perhaps drawing on expertise from the Woodland Trust or Organic Research Centre. Or if they introduce payment for creating specific habitats for rare species, then ecological advice must be readily available.
Specifically, my practical advice is to start thinking about gaps in the current SFI offer that you’d like to see filled. If you’ve got a problem with diffuse pollution from your yard, for instance, think about how SFI could support concrete yard renewal or effective muck storage beyond existing capital grants. If you’re passionate about returning wildlife to your farm, research species-specific habitat creation ideas you’d like to see included. The louder our collective voice, the more likely DEFRA is to include truly useful and impactful actions in SFI 2026. The more specific we can be about what we need, the better.
Capital Grants and Infrastructure: Beyond Annual Payments in SFI 2026
While SFI has largely focused on annual payments for land management, the SFI 2026 changes promise a stronger integration of capital grants. We’ve seen various pots of capital money – Farming Equipment & Technology Fund (FETF), Farming in Protected Landscapes (FiPL), Landscape Recovery, and so on – but they’ve often felt disconnected from the core SFI offer. DEFRA acknowledges this and wants to create a more joined-up system where capital items directly support SFI actions and help farmers deliver their environmental goals.
This would be a massive improvement. Imagine being able to apply for SFI actions to improve water quality, and simultaneously apply for a capital grant for a covered muck heap (costing upwards of £20,000 for a decent sized one) or a rainwater harvesting system (potentially £3,000-£10,000 depending on scale) directly from the same scheme or portal. This would significantly reduce the administrative burden and ensure investments are aligned with the long-term environmental objectives of the farm. We know that upfront investment is often the biggest barrier to farmers taking on more ambitious environmental schemes, so making capital readily available and linked to SFI is essential.
Expect to see more tailored capital offers linked to specific SFI ‘packages’. For instance, if you sign up for a ‘riparian zone restoration package’ (a hypothetical future SFI offering), it might automatically open up opportunities for fencing materials, tree planting, or even specialist machinery for bank stabilisation. The current FETF grants, with their specific lists and narrow application windows, are a start, but we need something broader and more aligned with genuine on-farm needs. The current ‘water quality item’ list in FETF, for example, is useful, but it doesn’t cover everything.
Specifically, my advice is to start compiling a list of capital investments your farm needs to enhance environmental outcomes. Think beyond the obvious. Are there old culverts that need repairing? Ditch maintenance that requires specific equipment? Would better livestock handling facilities reduce runoff? If you’ve got a specific issue, like diffuse pollution from a livestock yard, research the cost of a concrete pad and slurry store; we’re talking tens of thousands. Having these figures ready will mean you’re prepared when the integrated capital offers become clearer. The faster we can access capital to deliver the SFI actions, the more effective we’ll be.
Preparing for SFI 2026 Changes: Actionable Steps Today
So, with all these SFI 2026 changes on the horizon, what can you actually do right now to prepare? Don’t just sit on your hands waiting for the next DEFRA press release. This period of transition is precisely when you need to be strategic. The first thing is to get a really good handle on your existing agreements. Know exactly what you’re in, what you’re being paid, and when it expires. Dig out those old CS agreements, BPS maps, and any SFI schedules. Understand your total subsidy income and how much of that is tied to environmental work.
Secondly, start mapping your farm’s environmental assets and liabilities. Where are your priority habitats? Do you have areas prone to flooding, soil erosion, or nutrient runoff? These are the areas where future SFI options are most likely to be targeted and provide the greatest benefit. Consider undertaking a whole-farm environmental audit. You could use something like the Farm Carbon Toolkit or even just a simple hand-drawn map. Identify current biodiversity hotspots and areas where you’d like to see improvement. For instance, if you’re in a Nitrate Vulnerable Zone (NVZ), actions targeting nutrient management (NUM1, NUM2) are no-brainers, and likely to be expanded and better rewarded.
Thirdly, and this is essential, start building a relationship with a trusted advisor who understands ELM and isn’t just trying to sell you something. The Agricultural and Horticultural Development Board (AHDB) and your local Farming Connect or Catchment Sensitive Farming Officer (CSFO) can be invaluable resources. They often know the nuances of what’s coming down the pipeline before the official announcements. I’d also seriously consider joining the NFU or CLA if you’re not already a member; their lobbying power is essential, and they provide excellent scheme updates.
Specifically, finally, think about where you want your farm to be in five, eight, or even ten years. What are your long-term environmental goals? Do you want to reintroduce red-listed birds? Improve river water quality in your local catchment, like the River Axe in Devon? Or perhaps diversify into something like woodland pastures? The SFI 2026 changes offer a real opportunity to align your business goals with environmental delivery, but only if you have a clear vision. Don’t be afraid to think big. For example, if you’re aiming for net zero, look at SFI actions that promote soil carbon sequestration (like herbal leys, AHL1 at £382/ha) or reduced cultivation (SAM3 at £405/ha) and consider how future, more ambitious options might fit in.
Frequently Asked Questions
Will SFI 2026 payments be higher than current rates?
DEFRA has indicated a review to ensure payments cover income forgone and delivery costs. While no specific figures are confirmed, the expectation and farmer pressure are for increased rates on many actions to make them genuinely attractive and fair, potentially by 10-15% on some intensive options.
What’s the biggest difference between SFI 2023 and SFI 2026?
The main differences will likely be longer contract lengths (moving from 3 years to 5 or even 8 years), a wider range of actions and ‘packages’, and much better integration with capital grants and Countryside Stewardship, aiming for a single, unified ELM offer.
Can I have both Countryside Stewardship and SFI at the same time in 2026?
The aim is to integrate them. Initially, you’ll still be able to run both, but the intention is for CS options to eventually become ‘plus’ or enhanced options within a single SFI-led ‘Land Management’ scheme. DEFRA is promising a smooth transition for expiring CS agreements.
When will SFI 2026 details be officially announced?
While the broad principles have been outlined, detailed specifics for SFI 2026, including payment rates and the full list of actions, are expected to be announced progressively throughout late 2024 and 2025. Keep a close eye on DEFRA and NFU updates, and always cross-reference official government guidance.
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Official Sources
- DEFRA — Department for Environment, Food & Rural Affairs
- RPA — Rural Payments Agency guidance and updates
