By Joe Stanley, Head of Sustainable Farming, the Allerton Project
I was in the auditorium on 24 February for Secretary of State (SoS) Emma Reynolds’ address to the National Farmers Union’s annual conference in Birmingham. I’ll be honest: over the years of listening to many of her predecessors deliver similar set-piece speeches, I’ve become somewhat jaded at the inevitable preamble consisting of praise for hard-working farmers and our vital place in society, alongside promises of future action, not just warm words. This SoS, in place since only September, was no different in form but was, to her credit, somewhat more believable in style than many of her predecessors as she discussed the importance of working in partnership with farmers to deliver on a more resilient farming sector. Certainly, NFU President Tom Bradshaw was fulsome in his praise for his working relationship with the SoS.
The core of the speech, however, was a limited update on ‘SFI26’ following initial information released at the Oxford Farming Conference in early January. The key details are as follows:
- SFI26 includes 71 actions (down from 102 in the previous ‘Expanded Offer’). Defra claims to have removed actions with low uptake or those “that delivered less for food production, the environment or our wider environmental targets”.
- Annual agreement cap of £100,000 “to ensure that more farms are able to participate”.
- ‘Window 1’ will open in June 2026 to ‘small farms’ (3-50ha) without an existing ELM revenue agreement (any RPA-administered scheme).
- ‘Window 2’ will open in September 2026 for all farms.
- Each farm business can have only one SFI26 agreement.
- The area of rotational actions cannot be increased from Year 1.
- AHW7 Enhanced Over Winter Stubble added to existing 25% area limit cap “to prevent too much land being taken out of production”.
In addition, SFI26 will see a number of payment rate changes, with five upland rates increasing (moorland) and three of the most popular lowland rates decreasing:
- CSAM3: Herbal leys from £382/ha to £224/ha (-41%)
- CAHL2: Winter bird food from £853/ha to £648/ha (-24%)
- CNUM3: Legume fallow from £593/ha to £532/ha (-10%)
In all, this was a largely undramatic update on the direction of travel of SFI as first announced in January. What’s clear is that the basic structure of SFI will remain as it was under the ‘Expanded Offer’ of 2024 but with reductions and limitations: more dramatic predictions that we might see Defra channel most of the Farming and Countryside Programme (FCP) budget into the uplands at the expense of the lowlands haven’t come to pass. Instead, we’re seeing a simplified and capped version of what has gone before. Indeed, for those many upland farms without moorland, there is very little support in sight, which remains a massive concern.
Many of the lost options will be little missed, though some (the planning options which paid farmers to create soil, nutrient, hedgerow and integrated pest management plans) were among the most popular. Along with the disappearance of the ‘management fee’, the justification is that farmers should largely be carrying out those actions anyway and they were returning little value for money to the taxpayer or environment. It’s difficult to argue against this, although it is notable that with the loss of CSAM1 (assess soil, test soil organic matter) there is now no requirement whatsoever to collect data on soil health, a key metric for the progress of ‘regenerative’ farming. In general data collection for our national targets is vanishingly thin.
However, my eyebrows were raised at the reductions in payment rates despite ministerial protestations that Defra was not moving beyond the ‘income forgone plus costs’ formula: “Reductions are being made because initial payment rates for these actions were set too high. This made it too attractive to take highly productive land out of food production. We’re recalibrating them to reflect current margins and to support, not undermine, food production.”
I can’t help but think that this largely reflects the volumes of budget being spent on these options rather than a reflection of the true costs of delivering them. Indeed, with payment rates for many options across a range of ELM schemes dating back in some cases more than a decade, a sudden desire to see more dynamic pricing in line with market conditions on these three options seems questionable when taken in isolation.
The danger here is – as reported recently in Farmers Weekly with comment from me – we run the risk of explicitly asking farmers to subsidise the delivery of natural capital from their own pockets if we do not at least cover the costs associated with income forgone. If Defra wishes to see less field-scale establishment of options such as winter bird seed, then a maximum plot size rather than a reduction in payment rate would be the appropriate tool.
Similarly, it would have been preferable to have seen an (admittedly more complex) maximum agreement value per hectare cap rather than a total agreement value cap of £100,000. Estates operating at scale should not be penalised for their size: natural capital is natural capital, and this is clearly an administrative and political decision driven by a constrained budget rather than a determination of how best to achieve the net goals of ELM – thriving farmed landscapes and the generation of ecosystem services. Indeed, it might be argued that in their desire to be seen not to be funding large estates, the 3-50ha definition of a ‘small’ farm will sweep up many of the very ‘lifestyle’ farmers which successive government policies have sought to disadvantage but have, ultimately, benefitted.
However, it is welcome to see increased detail emerge on the future of SFI after a hiatus of some 11 months. We can only hope that, when the application window opens, the IT system is up to the task of rapidly processing applications and that, as promised at NFU26 by the SoS, there are urgent and active discussions afoot to ensure that the 10,000 existing schemes due to expire in December are able to be either rolled over or allowed entry into SFI26.
In addition to detail on SFI, the SoS also announced the return for 2026 of:
- £50m for the Farming and Equipment Technology Fund (FETF) with applications open from 17 March for 6 weeks until 27 April. This will be the last FETF in its current form.
- £70m for the Farming Innovation Programme to support new research and development, including £30m for ADOPT. Opens 9 April.
- £225m for ELM Capital Grants from July.