The government has published full details of the 2026 update to the Sustainable Farming Incentive (SFI26), part of the Environmental Land Management programme from the Department for Environment, Food & Rural Affairs.
While the overall ambition of SFI remains the same, supporting environmental delivery alongside food production, SFI26 introduces important structural and financial changes that will affect how agreements should be designed and managed.
With tighter caps, revised payment rates and fewer actions available, careful planning at the outset will be critical.
The Headline Changes
SFI26 introduces several significant updates:
- 71 actions available (down from 102 in SFI24)
- £100,000 annual cap per agreement
- One SFI26 agreement per farm business
- 3-hectare minimum eligibility threshold
- Rotational actions capped at Year 1 levels
- SFI management payment removed
- Many former 5-year actions reduced to 3-year agreements
- Base and supplemental actions must now be applied for together
The intention is simplification and wider access to funding. In practice, however, these changes mean agreement design in Year 1 is more important than ever.
Application Windows
Window 1 will open in June 2026 and remain open for around two months. However, it may close sooner if demand is high and the allocated budget is fully committed.
Window 2 will open in September 2026 for all farms. A fixed end-date has not been set at this point, because it will depend on how many farmers apply.
Agreement Caps and Area Limits
£100,000 Annual Cap
For the first time, SFI26 introduces:
- A £100,000 annual agreement cap
- A restriction to one SFI agreement per farm business
For larger businesses, this may limit total claimable funding and requires careful planning of action selection and land allocation.
Rotational Actions
Agreement holders cannot increase the area or value of rotational actions beyond what is declared in Year 1.
Areas can move between fields to suit cropping plans, but the total area cannot exceed the original Year 1 level.
This makes initial structuring of rotational land particularly important.
25% Area Cap – Enhanced Overwinter Stubble (AHW7)
AHW7: Enhanced overwinter stubble will now be added to the existing 25% area limit cap, which applies across 10 actions.
These actions, individually or in combination, cannot exceed 25% of the total agricultural area of the farm.
The purpose is to prevent too much productive land being taken out of food production, but this restriction may significantly affect some arable businesses that previously relied heavily on these options.
Payment Rate Changes
Some payment rates have been adjusted.
The revised rates continue to follow the established SFI methodology of “income foregone plus costs.”
Rate Increases – Moorland Actions
Payments have increased for the following moorland livestock actions:
- UPL1: Moderate livestock grazing – £35/ha (increased from £20/ha)
- UPL2: Low livestock grazing – £89/ha (increased from £53/ha)
- UPL3: Limited livestock grazing – £111/ha (increased from £66/ha)
- UPL8: Shepherding livestock (remove stock for at least 4 months) – £74/ha (increased from £43/ha)
- UPL10: Shepherding livestock (remove stock for at least 8 months) – £102/ha (increased from £48/ha)
These uplifts will apply to both existing SFI agreements and new SFI26 agreements.
The intention is to ensure upland farmers are properly compensated in light of recent livestock price changes.
Rate Reductions
Payment rates have been reduced for:
- CSAM3 – Herbal leys: £382/ha → £224/ha
- CAHL2 – Winter bird food: £853/ha → £648/ha
- CNUM3 – Legume fallow: £593/ha → £532/ha
These reductions apply only to new SFI26 agreements.
Existing SFI23 and SFI24 agreements containing these actions will not be affected.
The government has indicated that initial payment rates were set too high and may have incentivised productive land being taken out of food production. The revised rates aim to reflect current margins while supporting food production.
For some arable and mixed businesses, these changes will materially affect projected returns and should be carefully assessed before committing land.
5-Year Actions Reduced to 3 Years
Actions previously requiring 5-year commitments will now run for 3 years.
This is intended to simplify the scheme and improve accessibility, particularly for short-term tenant farmers.
However, shorter agreements may also require more frequent strategic review.
Base and Supplemental Actions – New Rule
Under SFI26:
- Base and supplemental actions must be applied for together
- They must sit within the same agreement and timeline
Supplemental actions cannot stand alone. They are designed to enhance base actions and must now align fully in structure and timescale.
This makes correct action pairing at application stage essential.
The Full SFI26 Offer – 71 Actions Grouped by Theme
SFI26 includes 71 actions grouped across themes such as:
- Agroforestry
- Boundary features
- Buffer strips
- Farmland wildlife (arable and grassland)
- Moorland
- Nutrient management
- Organic
- Precision farming
- Soil health
- Waterbodies
- Species recovery and management
- Heritage
The revised offer prioritises actions that:
- Deliver strong value for money
- Contribute to water quality and biodiversity targets
- Support sustainable food production
- Contribute to the Environmental Improvement Plan ambition to double the number of farms providing year-round wildlife resources by 2030
View the full list of actions and detailed payment tables here: SFI26: details, definitions and what to expect – The Farming Blog
How We Can Help
If you are interested in applying for an SFI agreement, our Stewardship & Grants team are available to go through the scheme options with you and identify which actions could work for your farm.
If you would like us to review how SFI26 could work for your farm business, please get in touch on 01981 590514 and speak to our team.