The future of Welsh farming is here: navigating the Sustainable Farming Scheme (SFS)

8th April 2026

NRM

Agriculture

Environment

For decades, the rhythm of Welsh farming has been tied to the Basic Payment Scheme. But as of March 2026, the gate has officially opened on a new era. The Sustainable Farming Scheme (SFS) isn’t just a change in paperwork; it’s a fundamental shift in how land is valued. It rewards farmers not just for the acres they hold, but for the resilience and environmental health built into both the landscape and into farm businesses.

The obvious question is, however: is this just more red tape?

For many, the transition may feel like a mountain to climb, but the intention is to support a productive, profitable industry that can withstand both climate and market fluctuations. Whether you’re managing a hill farm in Snowdonia or a dairy unit in Pembrokeshire, the clock is ticking toward the 15^th of May SAF (Single Application Form) deadline.

In this blog, we’re breaking down exactly what the “Universal Actions” look like on the ground and the practical steps you need to take right now to secure your farm’s future.

What is the Sustainable Farming Scheme (SFS)?

The SFS is designed to support a productive and resilient agricultural industry while addressing climate change and biodiversity loss. It replaces the Basic Payment Scheme (BPS), which will be fully phased out by 2029.

To enter the SFS 2026, you must register by 15^th May 2026.

The scheme is built on three layers:

Universal layer: 12 mandatory “Universal Actions” (UAs) that all participating farmers must complete to receive a baseline payment. If an action applies to your business and/or farm type, it must be completed.
Optional layer: a menu of additional actions farmers can choose to increase payments, such as organic conversion or advanced woodland management.
Collaborative layer: support for farmers working together on landscape-scale projects.

Wales-Sustainable-Farming-Scheme-rolling-hills

What do you need to do?

To join the 2026 scheme, farmers must meet several key requirements:

Confirm eligibility

You must:

Manage at least 3 hectares of land or complete 550 labour hours
Have had control of the land for at least 10 months

Review SFS mapping

Use RPW Online to:

Check field boundaries
Check your habitat coverage (10% minimum required)
Fix any errors using “Manage My Land”

Prepare for the 12 Universal Actions

This includes:

Soil health testing
Animal health planning
Completing mandatory training via Farming Connect.

Submit SAF application

Deadline: 15^th May 2026.

Key dates & support

15^th May 2026: deadline to apply and choose SFS over the legacy BPS
14^th October 2026: advance payments (up to 70%) begin
31^st December 2026: deadline for completing the 2026 Universal Actions
Funding: low-interest (3%) loans are available via the Sustainable Agriculture Loan Scheme (SALS).

It’s worth noting that you don’t have to join the SFS in 2026. You can remain in BPS and continue receiving payments during the transition. However, these payments will reduce each year until they are phased out in 2029. Once the transition is complete, there’s no going back to the BPS.

The new 10% habitat rule

Following backlash in 2024, the Welsh Government dropped the blanket 10% tree-cover requirement. In its place is a more flexible 10% habitat rule.

This now requires that:

At least 10% of each farm must be managed as habitat for biodiversity.
This forms part of the scheme’s Universal Layer, which is necessary for payments.
This can include semi-natural habitats, broadleaf woodlands, hedgerows, and newly created habitats since 2022.

If you already meet 10%, you must maintain those areas to qualify for a £69/ha habitat payment. If you fall short, you must create and maintain temporary habitats, such as fallow margins, wild bird cover, or buffer strips to reach 10%. Shared grazing and common land are excluded.

The 12 Universal Actions (UAs): what they really mean

The 12 Universal Actions (UAs) are mandatory for all farmers entering the SFS. They are designed to be relevant to most farm types, though some may only apply if you farm livestock or specific features (like woodland) exist on your land.

Table 1 – The 12 Universal Actions Breakdown

Action	What is required?
UA1: Soil Health	Test 20% of your improved land annually (5-year cycle) for pH, P, K, Mg, and Soil Organic Matter (SOM). Results must be uploaded to RPW Online.
UA2: Integrated Pest Management (IPM)	Assess and record your approach to managing pests, weeds, and diseases. You must keep an annual IPM plan detailing any plant protection products (PPPs) used.
UA3: Benchmarking	Monitor farm performance using Key Performance Indicators (KPIs). You must complete at least one whole-farm KPI and sector-specific KPIs via FarmData+.
UA4: Continuous Professional Development (CPD)	Complete 6 hours of learning annually through Farming Connect, plus a mandatory farm health and safety module.
UA5: Habitat Maintenance	Maintain existing semi-natural habitats on your farm (e.g., wetlands, species-rich grasslands) according to SFS management guidelines.
UA6: Temporary Habitat Creation	If your farm has less than 10% existing habitat, you must create temporary habitats on improved land (e.g., fallow margins or wildlife cover crops) to bridge the gap.
UA7: Designated Site Management Plan	If you have a designated site (like a Site of Special Scientific Interest (SSSI)), you must agree to and follow a management plan provided by Natural Resources Wales (NRW).
UA8: Hedgerow Management	Manage hedges to encourage growth and biodiversity. This includes halting annual cutting in many cases to let them grow taller and wider.
UA9: Woodland Maintenance	Protect and manage existing woodland blocks (over 0.1ha). This includes keeping deadwood and excluding livestock during sensitive periods.
UA10: Tree & Hedgerow Planting Plan	Create a “Planting Opportunity Plan” on RPW Online in your first year. This identifies where you could plant to reach future targets.
UA11: Historic Environment	Protect known historic assets (e.g., scheduled monuments or traditional buildings) by adopting a “do no damage” approach and conducting basic maintenance.
UA12: Animal Health & Welfare	Complete an annual review of livestock health and welfare, focusing on biosecurity and reducing the need for treatments through better planning.

How the soil testing requirement works

Soil testing is one of the biggest talking points, but it’s relatively straightforward once broken down:

20% of improved land annually
Cover all land within 5 years
Test for pH, phosphorus, potassium, magnesium, and SOM
Upload results onto RPW Online by 15^th January 2027 for the first scheme year.

How will you actually get paid?

The SFS payment structure combines several elements:

Universal Payment
- £70/ha for the first 70 ha
- £2/ha thereafter
Social Value Payment
- £107/ha on all eligible land
Habitat Payment
- £69/ha for qualifying habitat
Stability Payment (2026 only)
- £1,000 for farms up to 100 ha

How capping and tapering works

The Welsh Government employs capping and tapering to ensure that SFS funding is allocated fairly across more farms, rather than being focused on the largest landholdings. These rules apply to the total scheme payment. The Welsh Government has also created a ready reckoner to help you estimate your SFS payment.

Deductions are applied in “bands.” Payments are reduced as they increase, to spread funding more evenly.

First £25,000 – no reduction
£25k–£75k – 15% reduction
£75k–£150k – 30% reduction
£150k–£250k – 60% reduction
£250k–£300k – 90% reduction

Maximum payment: £300,000

An example calculation

If your calculated payment is £40,000:

– First £25,000 = unchanged

– Remaining £15,000 = reduced by 15%

– Deduction = £2,250

– Final payment = £37,750

Common land & cross-border rules

Common land: the payment for your grazing rights is added to your main farm payment beforethe cap is applied
Cross-border: capping is calculated based only on the Welsh portionof your claim.

Optional Actions – where you can earn more

The Optional Layer allows you to “pick and mix” additional actions for extra income. For 2026, these are grouped into 14 themes across six categories:

Sustainable food production

Soil improvement and crop diversity
More efficient production systems

Ecosystem resilience

Enhanced habitat management
Habitat creation
SSSI work programmes

Trees and woodlands

Woodland management
Agroforestry
Hedgerow restoration

Environment

Water quality and flood management
Air quality and emissions

Skills and knowledge

Public access
Advanced training

Sector support

Organic farming
Enhanced biosecurity

These build on the Universal Actions and give flexibility depending on your system and priorities. Payment rates for Sustainable Production actions within the Sustainable Farming Scheme (SFS) in Wales are primarily structured as capital grants or performance-based revenue payments. The Welsh Government has confirmed that approximately 30% of the 2026 SFS budget is allocated to these Optional and Collaborative layers.

The optional action layer has three distinct payment mechanisms:

One-off Revenue, for creating required management plans (e.g. soil or habitat plans).
Multi-annual Revenue: area-based payments for ongoing enhanced management (e.g. temporary habitat creation, capped at £5,000 per year).
Capital Payments: Standard cost grants for infrastructure and equipment (capped at £15,000–£20,000 depending on the specific category).

For example, farmers can access capital grants to support production and efficiency, with the aim of improving productivity, similar to the previous Small Grants – Efficiency Scheme.

Funding Range: between £500 and £15,000 per application.
Grant Rate: standard available payment at 40% of total eligible costs (excluding VAT).
Eligible Items: covers a range of widely available equipment from various manufacturers designed to improve farm efficiency.

As the Sustainable Farming Scheme (SFS) approaches its 2026 launch, the focus is on resilience and regulation. The shift from the Basic Payment Scheme to 12 Universal Actions and 14 Optional Actions marks a major change for Welsh agriculture, aiming to support viable farms that benefit both food and the environment.

Whether calculating the Social Value Payment or planning your 10% habitat requirement, staying informed and proactive is crucial. Welsh farmers can lead in creating a sustainable future by blending traditional food production with environmental stewardship.

How NRM can help

NRM offers soil analysis packages that meet the requirements of SFS Universal Action 1.

For more information about how analysis can support your farm business and secure your sampling kits in advance of the sampling season, please contact us or speak to your advisor.