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With farming incomes under more pressure than ever with poor commodity prices and ever-increasing input prices, many farmers are looking to the Department for Environment, Food & Rural Affairs (Defra) to provide support for the industry. Whilst direct support on diesel, inputs, and prices has not been announced, Defra did announce information earlier this year on environmental schemes: Sustainable Farming Incentive (SFI) 2026 and Capital Grants.

Sustainable Farming Incentive 2026

There will be two windows for applications later this year. The first will open in June 2026 for those defined as smallholdings – 3 to 50 hectares or those without existing Environmental Land Management (ELM) agreements. The second window for applications will open in September 2026, which will be open to all farmers who had a SBI number on 1st January 2026.

It is anticipated that the first window will be open for around two months, but this could be reduced if there are a large number of applications.

For those farmers already in a Countryside Stewardship (CS) or SFI scheme, the application window will open in September. However, especially with CS agreements, it is unlikely to be possible to apply for SFI 2026 actions on land which is already in a CS option. Therefore, those claimants may need to wait until 1st January 2027 to apply. The Rural Payments Agency has confirmed that it is aware of this issue and is looking at options to assist those claimants.

Under both application windows, payments will be capped at £100,000 per year and there may only be one agreement per registered business. Similar to the basis for Capital Grant applications last year, applications will be handled on a first come, first served basis, and the application window will close once the budget for the window is met. It is expected that the budget for each window will be released later in the year.

There will be 71 actions offered, most of which are similar to those in the previous SFI offer. The management actions such as CSAM1: Produce a Soil Management Plan will be removed.

Enhanced overwinter stubble is added to the list of actions where the area is capped. For these options, as listed below, the total combined area cannot be more than 25% of the agricultural area. Those actions subject to the 25% cap are:

• CIPM2: Flower-rich grass margins, blocks, or in-field strips

• CAHL1: Pollen and nectar flower mix

• CAHL2: Winter bird food on arable and horticultural land

• CAHL3: Grassy field corners or blocks

• CIGL1: Take improved grassland field corners or blocks out of management

• CIGL2: Winter bird food on improved grassland

• WBD3: In-field grass strips

• AHW7: Enhanced overwinter stubble

• AHW9: Unharvested cereal headland

• AHW11: Cultivated areas for arable plants

Reductions are confirmed on the payment rates for several actions:

• Herbal leys – from £383/ha to £224/ha

• Winter bird food – from £853/ha to £648/ha

• Legume fallow – from £593/ha to £532/ha

There is limited detail available on the actions removed from the scheme offer, but those remaining are focused on food production and environmental targets.

Rotational actions will be capped at the value and area of Year 1, i.e. the area/value of the rotational action cannot increase in later years above the Year 1 figure.

Capital Grant Scheme

Defra has announced there will be a further round of the Capital Grant Scheme, opening around July, with a budget of £225 million.

In the same way as last year’s offer, the items will be organised into the following groups:

• Boundaries, trees, and orchards

• Water quality

• Air quality

• Natural flood management

• Assessments

• Improvements

Funding limits will continue to apply to 4 of the 6 groups in the offer:

• £25,000 for the water quality, air quality, and natural flood management groups

• £35,000 for the boundaries, trees, and orchards group.

Options can be chosen from any of the groups, up to any funding limits.

As per last year, we expect there to be strong demand and the budget to be used up quickly.

Getting advice and approval from Catchment Sensitive Farming Officers (CFSO) is proving to be difficult and therefore there may be a benefit in focusing on options where CFSO consent is not required prior to applying.

Overall, with all the pressures on government spending, it is difficult to predict how long payments under these schemes will remain available. Therefore, it is important to have a good plan of what actions can be applied for, prior to an application window opening, so an application can be submitted early before the budget runs out.

For more information, please contact me.