After the SFI scramble: let’s build a farming payments system that works

The dust has begun to settle on this month’s Sustainable Farming Incentive (SFI) application round. Likened to the rush for Oasis tickets, around 12,200 applications flooded in within hours of the window opening, exhausting the pot of £233 million available by the end of the day. About 8,800 came from the much larger number of farmers with existing environmental agreements due to expire by next February, meaning that many seeking to maintain their environmental work may now face a gap in support.

For farmers unable to secure an agreement, particularly those planning around the end of an existing agreement, the experience will understandably be extremely frustrating. Farmers are already suffering from a combination of weather extremes caused by climate change and input price spikes driven by geopolitical shocks. Four out of the five worst harvests on record have occurred this decade following extreme weather. This summer is expected to have resulted in the worst harvest on record.

While there are important questions about how the application process operated, it’s important not to lose sight of what the level of demand tells us, ie that farmers are really keen to invest in business resilience and see being paid for environmental improvements as a way to do it.

Temporary fixes or any rolling back on the principle of ‘public money for public goods’ should be avoided. The simple lesson from this episode is that the UK needs to build a fairer farming payments system that can meet the demand, builds the greater resilience farmers want and leads to positive environmental outcomes.

In the aftermath of this experience, the government should:

1. Grow the funding pot
Farmers shouldn’t be forced into a scramble for funding to do work the country needs. And the government’s response to high demand in one part of its Environmental Land Management (ELM) scheme shouldn’t be to take money from another.

Past analysis has estimated that there is a £2.4 billion gap in current farming and land management budgets to match the scale needed to meet climate and nature targets.

This is not simply about making more money available for SFI. The three ELM schemes (SFI, Countryside Stewardship Higher Tier and Landscape Recovery) each have different functions, and all of them are needed to support farmers properly in playing their role in nature recovery, climate action and ensuring food security.

It is critical that the government gets this right. Climate change, nature loss and geopolitical uncertainty are putting pressure on food systems and pushing prices up at the till. ELM schemes are critical investments in resilience and protecting consumers during a time of multiplying shocks.

2. Fix the system 
More money will only go so far if the machinery for delivering it does not work properly.

The experience of this year’s SFI round exposed the problems with a system in which a limited pot can be exhausted within hours. A first come, first served model creates the wrong incentive. Public funding can end up being allocated to whoever is quickest to submit an application, rather than according to where the funding is most needed or where it can have the greatest benefit.

The government must make sure future SFI rounds work better, eg by having a stable annual window for applications to make planning easier. It’s good that the Department for Environment, Food and Rural Affairs (Defra) has already said it will work with farming organisations and the wider sector to consider how the next funding round can be refined ahead of its 2027 opening.

But fixing SFI also means looking at what happens around it. Higher Tier and Landscape Recovery schemes are intended to support more targeted and ambitious environmental action. Yet, slow processing and limited access to agreements are leaving farmers with few routes into the funding to get going, increasing pressure on SFI instead. So far, only £500 million has been allocated to Landscape Recovery for projects over the next 20 years. That’s only one per cent of the annual ELM budget.

The government should speed up the delivery of these other schemes, so farmers who are ready to undertake more ambitious environmental action can get on with it.

3. Make the money work harder for nature and climate
A third question that risks getting lost in the debate is whether we are getting the best possible good for the public from the money being spent?

While it’s right to focus on farmers’ access to support, that support must provide the best possible environmental return, which means making the connection stronger between ELM spending and the government’s wider environmental objectives.

Farm payments should be aligned with the Environmental Improvement Plan which sets out legally binding and long term goals, and with the Land Use Framework which shows how competing demands on land can be reconciled.

To help this, spatial targeting is needed, alongside efforts to expand farming aligned with environment goals. This would help direct more funding towards places where particular interventions will have the greatest benefits for nature, climate resilience, water, soil and food production.

A better system is possible 
The funding round last week was a bun fight which shouldn’t be repeated. Farmers who wanted to participate were left very disappointed and the government should now respond with a better funded, better designed system that’s more focused on positive outcomes for everyone.