The UK government's flagship Sustainable Farming Incentive (SFI) scheme, designed to reward farmers for environmental work, reached its £1.05 billion budget cap for 2024/25 and 2025/26 by March 11, 2025, forcing a sudden halt to new applications. This swift depletion of funds, committed to 37,000 live agreements, has triggered a re-evaluation of the scheme's funding and accessibility, with a new SFI26 scheme now launched with a significantly different budget structure.
Why now?
The closure of the SFI 2024/25 scheme in March 2025 was a direct consequence of its budget being fully committed. Defra stated, 'every penny of this has now been paid to farmers or committed for payment through existing agreements or submitted applications.' This necessitated a pause, as a 'responsible government committed to the careful management of a fixed budget.'
However, the abruptness of the closure drew sharp criticism. Farming Minister Daniel Zeichner admitted to Parliament that ministers had 'wrongly refused nature funding to 3,000 farmers in England when they shut the post-Brexit subsidy scheme.' He confirmed the decision to close the SFI 2024 scheme to new applications, without notice, on March 11, 2025, taking into account a message 'published in error on the screen.'
The current year, 2026, sees the launch of SFI26, with its first application window opening on June 30, 2026. This new iteration aims to address some of the previous scheme's challenges, particularly regarding access for smaller farms.
Who wins and who loses?
The shift in funding priorities and scheme design creates clear winners and losers within the farming community.
- Potential Winners: Smaller farms and those new to Environmental Land Management (ELM) schemes are being prioritised under SFI26 Window 1, which has allocated up to £60 million of its £240 million annual budget to this group. A Defra spokesperson noted this ensures 'funding reaches those who have too often missed out.' Farmers already in ELM schemes, which cover 50,000 farm businesses and over half of all farmed land, will continue to receive payments. Welsh farmers also see a commitment of over £1 billion for the current Senedd term, with £340 million guaranteed annually until March 2030 for their Sustainable Farming Scheme.
- Potential Losers: The 3,000 farmers who were 'wrongly refused' funding during the SFI 2024/25 closure represent a significant group impacted by the scheme's management. Farmers relying on 'delinked payments,' which are being phased out from 2021 to 2028, face drastic cuts. From 2026, these payments will see a 98% reduction on the first £30,000 and 100% on amounts above that, capping payments at £600. This represents a substantial loss of income for many. Larger farms, not prioritised by SFI26 Window 1, may also find it harder to secure new funding under the current structure.
Official Response and Scrutiny
Defra maintains that the government has 'secured the largest budget for sustainable food production in our country's history,' with £5 billion allocated to support farmers over 2024/25 and 2025/26. This includes the £1.05 billion SFI cap that was reached. The department also highlights that a £339 million increase in the ring-fenced farming budget for 2024-25 was largely due to £200 million reprofiled from the 2023-24 Capital DEL budget, enabling the rollout of ELM schemes.
However, the admission by Farming Minister Daniel Zeichner regarding the 'wrongly refused' funding casts a shadow over the scheme's administration. Critics argue that the sudden closure and subsequent re-opening with a smaller annual budget for new agreements (SFI26's £240 million annually compared to the previous £1.05 billion cap over two years) suggests a reactive rather than proactive approach to supporting the sector.
What this means for you
The way farm subsidies are allocated directly impacts the landscape of the British countryside, the types of food produced, and the environmental health of rural areas. Changes to these schemes can influence food prices, the availability of locally sourced produce, and the biodiversity of farmland, affecting everything from your weekly shop to local walking routes.
What happens next?
SFI26 Window 1, targeting smaller farms and those new to ELM, opened on June 30, 2026. Further application windows for SFI26 are expected to open throughout the year. The phasing out of delinked payments will continue, with the severe cuts taking effect from 2026. Additionally, over 13,000 Countryside Stewardship Mid-Tier schemes are due to conclude in 2026, potentially leading to further shifts in how land is managed and funded across England.
Sources
- Defra Spokesperson — July 9, 2026, statement regarding SFI26 Window 1 demand
- Defra Farming Blog — March 12, 2025, on SFI budget and cap being reached
- Farming Minister Dame Angela Eagle — June 11, 2026, on SFI26 budget
- Farming Minister Daniel Zeichner — May 12, 2025, statement to Parliament on SFI 2024 closure and reopening
- Welsh Government — July 19, 2026, announcement on Welsh Sustainable Farming Scheme