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Seeing the wood for the trees: SFI explained

The Sustainable Farming Incentive (SFI) is the first of three new environmental land management schemes introduced by the Department for Food, Environment and Rural Affairs (Defra) under the Agricultural Transition Plan.

The ambitions of the SFI, plus the Local Nature Recovery scheme and the Landscape Recovery scheme, is to support farmers in producing public goods such as water quality, biodiversity, animal health and welfare and climate change mitigation – alongside the primary task of food production. 

The SFI is the first of the three schemes to roll out and, last week, the government outlined its initial plans for making the scheme work. Defra is keen to point out that the roll out of the SFI is subject to ongoing modifications and improvements, drawing on what is learnt from pilots and initial roll-out.

Big ambitions

The government would like to see 70 per cent of farms in England and Wales in the scheme by 2028. The first pilot has just begun, with more than 900 farmers applying to join the pilot scheme is far. 

SFI pays for actions that relate to farming activities and any farmer who is eligible for the current BPS will be eligible for SFI. Over time, the SFI will be eligible to a wider range of famers – Defra expects this to happen after 2024. Only farmers with over five hectares of eligible land can access the scheme.

The scheme will operate at land parcel level, meaning farmers can choose how many of their fields to enter into SFI standards. This is a low risk way for farmers to enter the scheme as it does not mean their entire farm has to enter the scheme.

Generally whole fields have to be entered, but in the case of a field that is part woodland or where part of the field is in a Country Stewardship agreement, that part of the field would not be eligible for SFI.

The SFI agreements last for three years but there is flexibility to amend them every 12 months. This means farmers can increase the coverage of their agreements every 12 months, allowing them to incorporate additional standards as they become available; add more land; and increase ambition levels within standards. 

Room to manœuvre

This incremental route allows farmers the scope to try things out and then increase or decrease the land in the scheme depending on the success of the outcomes. 

SFI agreement holders will be expected to have management control of the land for the duration of the three-year agreement. For tenant farmers, this means they must check they have sufficient management control under the terms of their agreement. Farmers with less then two years of an agreement left should not enter it into a SFI. The main options here are to renew their tenancy agreement early or wait until the tenancy is renewed and then enter it into SFI.

The SFI payments will be paid in quarterly instalments, three months after an agreement starts. 

Organic farms can take part in the early rollout of the SFI and will probably be able to join at the higher levels of ambition for soil standards. Organic producers can also join the Countryside Stewardship scheme so long as they are not being paid for the same action twice. 

Farmers will be able to enter land into the SFI scheme is they have the same land in private sector scheme, such as carbon trading or payment for natural flood management. 

The standards will be introduced incrementally, allowing for overview and revisions. For now, the three standards available are: The Arable and Horticultural Soils standard; the Improved Grassland Soils standard; and the Moorland and Rough Grazing standard. In addition, Defra will pay for annual health and welfare review for livestock. 

All information on the payments and standards are available on the Defra website: https://www.gov.uk/government/publications/sustainable-farming-incentive-how-the-scheme-will-work-in-2022/sustainable-farming-incentive-how-the-scheme-will-work-in-2022

Reaction

Early reactions have been mixed, with nature and environmental groups criticising Defra for a ‘lack of ambition,’ and many farming groups expressing disappointment at the payment levels.

Quoted in the Farmers Weekly, Christopher Price, chief executive of the Rare Breeds Survival Trust, said the payment rates were ‘disappointing’ and ‘not enough to make a difference to farm incomes… and address the climate and biodiversity challenges’.

But he urged all farmers to engage with the SFI while Defra works to improve elements.

‘If SFI take-up is low, the chances of the Treasury saying farmers aren’t interested and seeking to claw back the money will only increase.”

And quoted in the Eastern Daily Press, CLA East regional director Cath Crowther said it was a 

‘major milestone” for agricultural incentive schemes, with “great importance for farmers and landowners here in the east’.

However, she added: ‘Make no mistake, whilst many farmers are very supportive of the direction of travel, they are deeply concerned about the transition from the old regime to the new, particularly regarding imminent cuts to the Basic Payment Scheme.

‘Whilst high commodity prices in some sectors will help cushion the blow, we should remember that many farms operate on small profit margins. It is therefore incumbent on government to ensure every farmer is supported in the years ahead.’