The Department for Environment, Food and Rural Affairs has set out the new Sustainable Farming Incentive 2026, or SFI26, as the main route for fresh revenue agreements in England. SFI is the government scheme that pays farmers to manage land in ways that improve nature and soil health while continuing food production, and Defra says the revised offer is intended to be simpler to use and more evenly distributed across farm businesses. Defra said SFI26 will be backed by £240 million for new agreements, building on more than £560 million already committed. The department is presenting the package as support for family farms facing tighter margins, volatile input costs and the wider pressures of modern farming.
Applications are due to open in two stages. From 30 June 2026, Window 1 is expected to accept applications from small farms and from businesses that do not already hold an Environmental Land Management, or ELM, revenue agreement. Defra said £60 million of the SFI26 budget has been set aside for this first stage, with any unallocated funding then available for the second stage. A broader application window is expected to open in September 2026. At that point, all farmers and land managers in England will be able to apply, subject to the scheme rules. The staged opening is important because it gives priority access to farms that have had less access to the existing ELM revenue offer.
The redesign includes several controls aimed at spreading funding more widely. New SFI26 agreements will be subject to a £100,000 annual cap, each farm business will be limited to one SFI26 agreement, and the separate SFI management payment will end for new applications so that more of the budget can be directed towards paid land management actions. Defra has also introduced a new restriction on adding land to rotational actions after the first year of an agreement, which it said is intended to improve budget certainty. Nearly all SFI26 actions will move to a standard three-year term. The department argues that this should make the scheme easier to administer and easier for tenant farmers to use.
According to Defra’s published scheme rules, farmers will be able to choose from 71 actions. Among the new options are measures designed to reduce reliance on synthetic fertilisers in favour of more sustainable alternatives. The government says that change should help lower input costs and reduce exposure to global market shocks, while also supporting soil condition and water quality. For farm businesses, the practical effect is that agreement design becomes more important at the start of the application. With only one agreement permitted per business and tighter rules on later expansion, decisions about which parcels to include, which actions to combine and how to balance environmental payments with production plans will need to be made earlier.
The SFI26 announcement sits alongside a wider group of environmental land management schemes. Defra said at least £50 million will be available this year for new Countryside Stewardship Higher Tier agreements, with funding targeted at improvements that deliver the greatest environmental effect. The department expects the scheme to continue supporting habitats such as species-rich grassland, with further detail still to be announced. The government also said the next group of Landscape Recovery projects is expected to move into implementation this year, supporting large-scale work on rivers, habitats and place-based restoration across England. Separate capital support is also being expanded. Defra published new Capital Grants guidance on 28 May and said the scheme will reopen for applications in July with £225 million available, which it described as 50 per cent higher than in 2025.
There is also a specific change for farms with Environmental Land Management agreements due to end soon. Defra said it is building new functionality into the SFI26 application service so that land currently within soon-to-expire agreements can be included in a new SFI26 application before the earlier agreement ends. The department expects that function to be available from the start of Window 2 in September 2026. That detail affects timing. Some small farms that qualify for Window 1 may still decide that waiting until September offers a better route if part of their holding is tied up in an expiring agreement. The government said it aims to confirm before Window 1 opens whether this approach will be available, allowing affected businesses to judge which application round is more suitable.
The policy case for the redesign is being framed around both distribution and food security. The announcement follows commitments made at the Oxford and NFU conferences to revise the Sustainable Farming Incentive with farmers and industry. Environment Secretary Emma Reynolds said farmers remain central to food supply, rural communities and the wider economy, and argued that the previous SFI was too concentrated, with a quarter of funding going to four per cent of farms. For the sector, the immediate picture is clearer on budget controls than on overall demand. Defra’s published rules, terms and conditions and full list of actions now give applicants a firmer basis for planning, but the removal of the management payment and the new annual cap mean the revised scheme will work differently for larger or more administratively complex businesses. The government’s stated aim is a scheme that is easier to enter, more predictable to fund and broad enough to support food production, farm resilience and environmental improvement at the same time.