The government is closing the Sustainable Farming Incentive (SFI) to new applications.
In what will be seen as another blow to the farming industry, the SFI has been suspended with immediate effect. Defra has stressed that the decision does not affect existing agreements and that applications made before 11 March will still be processed and honoured should they be agreed.
The decision was taken to terminate the latest tranche early with a view to ‘reviewing’ the initiative ahead of future implementation. No indication has been given regarding if and when the scheme might reopen.
The news follows the decision in November to suspend Capital Grant Funding for agricultural land projects that met certain sustainability criteria, in that instance because the scheme was oversubscribed. The government has just announced that this funding stream will reopen in summer 2025.
In the wake of the Autumn Budget 2024, the government has pledged what it claims amounts to £5bn over the next two years to support sustainable farming, land management and nature recovery initiatives. That money is spread out over a large number of schemes. But the SFI is recognised as the largest single sustainability-linked funding stream open to farmers.
Launched in 2022, the SFI pays farmers and land managers to adopt a set of approved ‘actions’ linked to sustainable food production and environmentally friendly land management. Agreements last three years, with a fixed annual payment for each action plus an additional management payment of £40 per hectare in the first year and £20 per hectare thereafter. More than 37,000 agreements have been put in place since launch.
ELM funding up in the air
The SFI is one of three flagship environmental land management (ELM) schemes launched by the last government. Along with Countryside Stewardship Higher Tier (CSHT) and Landscape Recovery, ELM funding was supposed to herald a fundamental shift in agricultural funding away from production-focused subsidies to prioritising sustainability in the rural economy.
However, with the CSHT now the only one of the three ELM schemes currently open, it raises questions about the current government’s farming strategy, and leaves farmers in the dark about funding opportunities pending further announcements.
If you have already applied for SFI funding and are awaiting a decision, the agreement will be honoured should it be approved. If you receive an offer, you have 10 working days to accept the agreement, otherwise it will lapse and you will not be able to reapply until further announcements are made.
If you are currently taking part in a pilot project under the terms of the SFI, you will still be able to apply for full funding once that has been completed, subject to approval.
To find out more about how the closure of the SFI could impact your financial planning going forward, and what your options are pending further announcements about the scheme, get in touch with our agricultural and rural finance specialists.
