Last week’s NFU Conference saw welcome news on the Sustainable Farming Incentive (SFI) Scheme for 2026.
Defra has now set out the structure and timetable for reopening the scheme. Its plan provides more predictability to hopefully guard against any repeat of what happened in 2025 with the abrupt closure of the scheme. However, several important uncertainties still need resolving before businesses can commit with confidence.
What has been announced so far
• Two application windows. Window 1 opens in June for small farms and for those without an existing Environmental Land Management revenue agreement. Window 2 opens in September for all farms. Each window will have its own Defra budget, with the plan being to issue updates on what is left as funds are drawn down. Window 1 may close early if its budget is used.
• A streamlined offer. Actions reduce from 102 to 71, with some payment rates adjusted.
• Structural limits. One SFI 2026 agreement per business, a £100,000 annual cap, and a minimum three hectare entry requirement. The SFI management payment is removed. Rotational actions cannot exceed Year 1 levels.
Defra’s proposed shift to fixed windows and published budgets is clearly intended to avoid a repeat of last year’s sudden closure.
Why this is helpful
• More certainty for planning. Defra has committed not to close windows without notice and to publish the full Window 1 budget in advance. With a June to September timetable, most applicants should be able to plan realistically.
• Improved access. Giving smaller farms and businesses outside ELMs first access addresses fairness concerns raised after the 2025 closure. Industry groups have broadly welcomed this reset.
Key concerns
• Unknown budget split. Defra has not yet said how much funding will be allocated to each window. This matters for larger farms and existing agreement holders who must wait for September. There is a risk the September budget could be tight.
• Restricted eligibility in June. Limiting Window 1 to small farms and those outside ELMs narrows early access and increases likely competition in Window 2.
• Risk of early closure. While Defra promises clearer updates, strong demand has closed the scheme early in the past. Without visibility of the total SFI budget and the split between windows, applicants cannot assess their risk and that creates a lot of uncertainty. That promised visibility is crucial.
• £100,000 cap. Although presented as a fairness measure, the cap raises a policy question. If SFI pays for public goods, restricting scale may limit delivery by larger estates of landscape ‑level projects.
Payment rates and scheme design
Several rates have been rebalanced. Moorland actions rise, while some arable actions fall, and certain options have been removed. This is intended to focus public money on value for money and maintain productive land, but it will affect agreement design, particularly for mixed and arable farms.
Rotational land is fixed at Year 1 levels for the full three ‑year term. This means Year 1 decisions now set the upper limit of income for the whole agreement.
What further budget clarity is needed
Given last year’s abrupt closure, Defra would improve confidence by quickly publishing:
- the total SFI 2026 budget,
- the split between Windows 1 and 2, and
- Real ‑time uptake data throughout each window.
The NFU has called for the same clarity. Until allocations are published, the risk of early closure remains uncertain.
A positive development
The Secretary of State has acknowledged the disruption caused by the 2025 closure and committed to avoiding sudden shutdowns. Together with proposed fixed windows and defined budgets, this is a welcome step. As advisers who supported landowners affected by the 2025 closure in challenging what the Government had done, with the result being that it was partially reopened for some, we have seen the impact such changes can have on business planning.
Practical advice for farmers and landowners
• If you qualify for June, prepare now. You should confirm eligibility for the small farm route and assemble action maps and compliance records. Window 1 might close early if funding is fully committed.
• If you must wait until September, model scenarios. Review the impact of the £100,000 cap and fixed Year 1 rotational areas. Consider the possibility of a shorter or competitive process in the second window.
• Monitor budget announcements.
The Birketts view
The 2026 reset is a constructive step. Fixed windows, clearer communication and a simpler offer should improve planning. However, two issues still create legal and operational risk:
- Lack of transparency on the budget split between windows, which could cause real problems if not handled openly, and
- The £100,000 cap, which could be vulnerable to challenge if it limits the delivery of public goods at scale.
Edward Venmore and Danielle Spalding are lawyers in our Agricultural and Estates Team. They acted for landowners nationally to challenge the abrupt closure of the 2025 SFI scheme.
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The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at March 2026.