Farming Focus

At the time of writing (1st June) there had been no further announcement from Defra on SFI26.  The scheme is due to open in June, for small farmers below 50 Ha and those without any existing agri-environment agreement.  But we are yet to have a precise opening date, indication of the budget available, or full scheme literature.

The second ‘window’ for SFI will open ‘in September’ and will be available to everyone else.  However, there remain many uncertainties around the scheme.  The chart below shows when existing SFI agreements are due to end.  It can be seen that the ‘what comes next’ question is now pressing for quite a large number of businesses with agreements ending in the latter part of this year.  The number of farms requiring a replacement for their existing SFI then accelerates into early 2027.

Those with existing agreements expiring in the winter of 2026/27 may be looking at the September application window to secure a replacement and ensure there is no gap in funding.  Unfortunately, there are a number of issues.  The first is that Defra’s IT systems have always struggled to allow applications whilst an existing agreement is still operating.  Whilst Defra are aware of farmers’ desire to have agreements following seamlessly, the ‘computer-says-no’ problem has yet to be resolved.  This is also an issue for those with Countryside Stewardship agreements (including those rolled-over from last year) that end on 31st December.

Another issue is funding.  We have previously indicated that Defra’s budgetary headroom in 2026/27 looks limited and is likely to restrict the number of new or replacement agreements being offered in the September window.  This is one of the reasons behind the £100,000 per agreement ‘cap’ imposed on SFI26 – to allow the funding to go further.  That figure will be well below what many businesses are currently receiving under their existing SFI agreements.  

This then brings into consideration what happens with SFI next year.  Defra has provided no details on ‘SFI27’.  Indeed, there may be no such scheme, with the SFI26 just opening, with all the same rules, for another application window next year.  Defra has stated that after the last set of SFI changes there will be no more for the lifetime of this Parliament – whether this will actually be the case is, again, unclear.  Whether the SFI26 is deemed to be carrying-on could be important, as one of the new rules is that it is not possible to have more than one SFI26 agreement per SBI number.  Therefore, if an application is made this autumn it could use up farmers’ ‘token’ for future windows.

Another potential reason to delay applications is the £100,000 per agreement cap.  There is no clarity over whether this is just in place for the 2026 year, due to restricted funds, or whether it is now a permanent feature of the scheme.  It is possible that any ‘SFI27’ could see this cap removed or altered.  If the principle behind the SFI is to ‘buy’ environmental improvements from farmers then a cap makes no logical sense – the size of the selling business is immaterial.  However, recent Government rhetoric has shifted to seeing the SFI as more of an income support or social measure – i.e. small farmers are being favoured.  

Some business are already thinking about splitting in order to circumvent the SFI cap.  This is not always easy in practice as the RPA will look at who has ultimate control of each business.  If it is the same owners, then the business will be treated as a single entity.  There are longstanding rules in this area (see https://www.gov.uk/government/publications/rural-payments-if-the-structure-of-your-business-is-changing/separate-business-questionnaire-iacs26-guidance ).

All this uncertainty makes it difficult to plan a way forwards.  If you would like to discuss your options with one of our consultants or would like help in drawing up a scheme, please contact one of our Team members or email [email protected] 

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Defra has published the guidance for its Capital Grants offer in 2026.  Whilst no exact date has been given yet, the application window, for funding to help farmers and land managers carry out environmental improvements across England, will open sometime in July.  Under this round £225 million is being made available but, in the past, the scheme has been very popular and it is not expected to be open long before the budget has been allocated.  Defra, similar to last year, will provide updates on its Blog when 25%, 50% and 75% of the available funding has been allocated.

ELM Capital Grant Offer

In the main the offer is similar to last year, the available items will continue to be organised into the same six groups:

• boundaries, trees & orchards
• improved water quality
• improved air quality
• improved natural flood management
• assessments
• improvements

Funding limits will continue to apply to four of these groups:

• up to £25,000 for the air quality, natural flood management and water quality groups
• up to £35,000 for the boundaries, trees and orchards group

Only one application per SBI can be made, but this can include items from all six groups up to the grant cap for each group (i.e max £110,000) plus items from the assessments and improvements groups.  This year, Defra is asking applicants to provide their supporting evidence, maps etc. along with their application or, at the latest, within within 10 days of the application.

A list of  all the items included in this year’s Capital Grants offer is available in section 5.2 of the Applicant’s Guide: Capital Grants 2026 which can be found via https://www.gov.uk/government/publications/capital-grants-2026.  Applicants can also use the Capital grant finder via https://www.gov.uk/capital-grant-finder for more details and specific requirements for each of these items.

Changes to the 2026 Offer

There have been a few changes to the items available this year, these include;

•  the Agroforestry items and the Woodland Condition Assessment will not be available through Capital Grants.  They will instead be available later this year through the Higher Tier Capital Grants offer
• TE6: Tree guard (tube and mesh) has been withdrawn, this will be replaced by a new item, TE19: Tree guard (narrow weld mesh)
• the names and specifications for tree guard items TE7 and TE8 will be updated when the Capital grant offer opens.

Prepare Now

We do not expect the application window to be open for very long, so applicants are encouraged to prepare now.  This includes;

• completing previous claims.  If there is an unfinished/unclaimed capital grant on a land parcel, it is not possible to apply for another on that field
• checking business and land details are up to date on Rural Payments
• preparing supporting maps so these can be sent to RPA at the same time as the application is made
• preparing financial evidence if applying for more than £50,000.

If you would like to discuss making an application with one of our consultants or would like help with any of the above in preparation for the opening of the scheme, please contact one of our Team members or email [email protected] 

If you found this article useful, there are numerous additional articles published each month on our Professional Update bulletin service. You can access a no obligation 90-day free trial via the link below.