The evolution of the Sustainable Farming Incentive: from launch to SFI 2026

Author: Alli Arden

9th June 2026

NRM

Agriculture

Since its introduction, the Sustainable Farming Incentive (SFI) has reshaped the landscape of agricultural policy in England. Introduced as part of the Conservative government’s post-Brexit Environmental Land Management (ELM) framework, the scheme replaced the Basic Payment Scheme (BPS) and shifted towards a system based on delivering environmental outcomes.

But the SFI has not stood still. Since the first pilots, the scheme has evolved rapidly, often unpredictably, creating both opportunities and uncertainty for farmers across England.

Understanding the evolution of the Sustainable Farming Incentive – how the scheme has developed from its first trials to the SFI in 2026 – helps explain the direction of agricultural policy and how farm businesses may need to adapt in the years ahead.

Testing the waters: the SFI pilot (2021)

It all started in October 2021, when Defra launched the SFI pilot with around 900 farmers. The aim was to test the framework before introducing it nationwide.

Farmers participating in the pilot trialled eight environmental “standards” in areas such as soil management and hedgerows. Each standard had three ambition levels: Introductory, Intermediate, and Advanced. These trials allowed participants to explore how the scheme might work in practice and were intended to help Defra refine the scheme before a national rollout.

The pilot phase concluded two key points:

• Farmers were willing to engage with the new framework
• The scheme would need to evolve to suit the wide range of farming systems across England.

The first rollout: SFI 2022

The first full version of the scheme launched in June 2022. Compared with later versions, the offer was relatively narrow.

It focused primarily on three areas:

• Arable and horticultural soils
• Improved grassland soils
• Moorland assessments

This early rollout was designed to encourage participation without overwhelming farmers with complexity. However, it was clear that the scheme would need to expand if it was to become the main replacement for BPS, particularly as participation, while not formally restricted, was more readily accessible to those already familiar with existing support mechanisms.

A more flexible approach: SFI 2023

In 2023, the SFI underwent a significant redesign. At this point, the Conservative government’s priority was to expand participation and encourage widespread enrolment. As a result, the scheme’s redesign emphasised flexibility and scale.

The rigid standards used in earlier versions were replaced by a flexible “pick-and-mix” model, allowing farmers to select from 23 individual environmental actions rather than committing to a full standard.

This change reflected feedback from the pilot and early adopters; farmers who wanted greater flexibility to tailor the scheme to their own businesses.

Other practical changes that were introduced at the same time included:

• Three year agreements
• Quarterly payments

Both of these made the scheme more accessible, especially for tenant farmers who may not have long-term land security.

The expanded offer: SFI 2024

The next major development came in May 2024, when the government launched the SFI Expanded Offer. This version increased the number of available actions to more than 100, integrating many options previously found in the Countryside Stewardship Mid-Tier scheme.

The goal here was to create a single entry point for environmental land management for farmers, simplifying the overall system allowing farmers to combine multiple actions within one agreement rather than navigating several different schemes.

By October 2025, uptake had grown substantially. There were around 44,000 active SFI agreements, including over 25,000 under SFI 2023 and more than 19,000 under the expanded 2024 offer. Soil management and nutrient planning actions proved particularly popular during this period.

However, the rapid expansion of actions and payments also led to concerns about cost and effectiveness.

Summary of SFI uptake figures (October 2025)

The evolution of the Sustainable Farming Incentive: the 2025 pause

Despite strong uptake so far, in March 2025, Defra unexpectedly closed the SFI to new applications after reaching its allocated budget. At that point, around 37,000 agreements were already in place.

This closure showed the delicate balance that Defra had to maintain. On one hand, the government wanted widespread participation across English farmland. On the other hand, the scale and cost of the programme meant that adjustments were necessary to keep spending within limits.

The pause also coincided with a period of political change in the UK. There were roughly eight months between Labour taking office (July 2024) and the SFI being paused (March 2025), which may have created additional uncertainty about the future direction of agricultural policy.

Shifts in government priorities or funding commitments can influence farmers’ confidence in schemes like SFI, potentially affecting decisions to apply or expand participation.

For many farmers, the pause highlighted the challenges of joining and adapting to a support system that was still evolving, potentially putting people off from joining in the future.

Looking ahead: SFI 2026

The next chapter of the scheme will begin with the launch of SFI 2026, which is expected later this month (June 2026).

This redesigned offer introduces several significant changes:

• A streamlined list of 71 actions
• A £100,000 annual payment cap per agreement – Defra says this is intended to encourage participation across farms of different sizes
• A new structure aimed at widening access across the farming community

The changes reflect a shift in policy focus. Earlier versions of the scheme prioritised widespread participation, whereas SFI 2026 is designed to target funding more carefully across the industry.

Some actions that were previously funded will also disappear. For example, payments linked to soil and nutrient management planning have been removed, reflecting a policy view that certain planning activities should already form part of baseline regulatory compliance.

The £20 per hectare management payment, which previously supported smaller farms, will also be removed for new agreements.

The SFI 2026 scheme has not fully opened for applications yet. Defra has published guidance and “near-final” scheme details, but the main application window is expected to open from 30^th June.

What has happened so far this month?

Scheme information and guidance were released in early June, and a small test phase (by invitation only) is planned from around mid-June (≈18 June) and later this month, the first proper application window (“Window 1”) is due to:

• Open from ~30 June 2026.
• Be limited initially to small farms and those without existing ELM agreements.

How has the SFI impacted the agricultural industry so far?

During the 2023-2024 rollout period, large areas of farmland underwent baseline assessments and environmental planning. By late 2025, around 44% of land in England had completed soil management actions – that’s over 3.89 million hectares of farmland that have already gathered the baseline data required for several years of compliance.

As a result, there has since been a natural slowdown in activities such as soil sampling.  Most farms are now prepared for their first 5-year cycle, which naturally causes a dip in new sampling activity, and the steady, annualised cycle hasn’t fully kicked back in yet. This suggests that analysis is likely to decline in the medium term.

At the same time, the wider economic environment is shaping farmer decisions. Agricultural profitability has come under pressure, with industry forecasts suggesting that total income from farming could fall significantly in 2026. This is likely to cause farmers to be more careful with how they spend their money, potentially reducing what they consider as “discretionary costs” like more regular soil and soil organic matter (SOM) analysis.

However, Defra has a midway solution to this issue.

The evolution of the Sustainable Farming Incentive: what happens next?

Defra announced earlier in the year a £30 million Farmer Collaboration Fund alongside the SFI, aimed at supporting farmer-led groups working together on environmental challenges and sustainable productivity.

Instead of paying individual farms to complete administrative action plans, the fund is designed to encourage shared learning, joint trials and collective sustainable agricultural/environmental management practices across landscapes.

This represents a notable shift in policy thinking. After 24 months of Labour, the government is now also funding a shift from individual compliance to collaborative approaches to environmental land management, which is a focus.

How can NRM help?

From a small pilot scheme to tens of thousands of agreements, the SFI has evolved quickly in just a few years.

However, with the uncertainty surrounding it and what this new iteration will include, we’re here to help. With robust soil analysis, including SOM and soil organic carbon (SOC), we will help you both comply with what the scheme requires and help you improve productivity on your farm.

Contact NRM for more information or speak to your agronomist.

Resources

https://defrafarming.blog.gov.uk/2026/06/02/sfi26-scheme-information-now-available/