The Welsh Government has published details of the Sustainable Farming Scheme (SFS) which commences on 1st January 2026. The SFS is replacing the Basic Payment Scheme (BPS) in Wales and, from 2026, farmers will have the choice to either enter the SFS or remain with the BPS. The BPS will be phased out by 2029. Below is a summary of the scheme details, a full description can be found via https://www.gov.wales/sustainable-farming-scheme-2026-scheme-description-html#175191
Scheme Structure
The three-layered structure from previous consultations has remained – Universal, Optional and Collaborative Layers. These three layers sit above the SFS Regulatory Baseline and a Universal Code (see ‘Scheme Requirements’ below). The Universal Layer has 12 Universal Actions (UAs) which farmers must meet (where relevant to their holding) to receive the Universal Payment. Those who want to go further and deliver more targeted outcomes can choose to undertake the Optional Actions (OAs) and there may be opportunities for landowners to work together and deliver environmental benefits at landscape or catchment scale by undertaking Collaborative Actions (CAs).
Scheme Requirements
There is a set of Scheme Requirements that underpins the three-Layered structure;
- SFS Regulatory Baseline – much like the existing cross-compliance regime.
- A Universal Code – a framework of non-regulatory requirements designed to protect soils, biodiversity and habitats, trees and landscape features. This includes the requirement for at least 10% of each farm to be actively managed as Habitat (the previous requirement that a further 10% be manged as woodland has been dropped).
- A Farm Level Carbon Baseline – this will be a requirement in the second year of the Scheme based on information provided in the SAF in the previous year
Payments and BPS
A Universal Payment will be made for undertaking the SFS Scheme Requirements and meeting all the Universal Actions. In addition, a Social Value reflects the public value of outcomes delivered through participating in the SFS which are not reflected in market prices.
For those farmers who join the scheme in 2026 and farm 100 hectares or less there will be an additional one-off £1,000 Stability Payment. Capping will be applied to payments. Details of capping and payment rates are summarised in the table below. Payment mechanisms and rates for the Optional and Collaborative Actions are not yet available.
The Basic Payment Scheme (BPS) is being phased out from 2026. Farmers can decide to remain in the BPS or go into the SFS. Once they have chosen to participate in the SFS they will not have the option to revert back to the BPS. The BPS payment, including Redistributive and Young Farmer Payment will be phased out as detailed in the table above, so that there will be no application or payment in 2029.
The application process for the SPS will be similar to the current BPS, with farmers declaring annually all the land under their management control on their SAF by 15th May each year. There will be no requirement to have entitlements for the scheme.
Summary of Payments, Capping and BPS Phase Out
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