The Sustainable Farming Incentive (SFI)

SFI 2024: What the Government’s Decision Means for British Farmers

At S. Thorogood & Sons, we’ve always championed British farmers and the sustainability initiatives that help them thrive. The Sustainable Farming Incentive (SFI) was a key part of Defra’s Environmental Land Management (ELM) scheme, rewarding farmers for adopting environmentally friendly practices while maintaining food production. However, last week's announcement that new applications for SFI 2024 have been paused has sent shockwaves through the industry.

What is the SFI?

The Sustainable Farming Incentive is one of three environmental schemes designed to replace the EU’s Basic Payment Scheme (BPS). It provides financial support to farmers for implementing sustainable land management, such as improving soil health, enhancing biodiversity, and reducing carbon emissions. Unlike the more complex Countryside Stewardship and Landscape Recovery schemes, SFI was meant to be flexible, accessible, and provide regular payments for farmers transitioning toward greener practices.

Why Have Applications Been Stopped?

Defra has cited “unprecedented demand” as the reason for halting new applications. The Rural Payments Agency received more applications for capital grants (which support environmental improvements) between May and November 2024 than in the entire previous financial year. This surge meant that the available budget was exceeded, leading to the closure of applications while funding is reassessed​.

Ramifications for British Farmers

Financial Uncertainty – Many farmers had planned their business strategies around expected SFI payments. The sudden halt means new applicants won’t receive funding, leaving some operations in financial limbo.

Investment Setbacks – Farmers who invested in sustainable practices, expecting support from SFI, now face potential losses. Investments in cover crops, soil health initiatives, and habitat creation might be delayed or abandoned.

Undermining Trust – The government has encouraged farmers to shift towards environmental sustainability, but this decision raises concerns about long-term policy stability. Trust in government support for sustainable farming is diminishing, making future participation in schemes riskier.

Disrupting Food Security and Supply Chains – Sustainability and profitability need to go hand in hand. If farmers are left in financial difficulty, the UK’s food supply chain could see rising costs and production issues.

What’s Next?

Defra has promised a “simplified and rationalised” funding approach in 2025, but details remain unclear. Some elements of the scheme, such as Woodland Tree Health grants and Higher Tier capital grants, are still available​. However, without a clear timeline for reopening SFI applications, many farmers are left uncertain about their future planning.

We strongly believe that British farming deserves consistent and reliable support. The UK’s farmers are at the forefront of sustainable food production, and abrupt policy changes risk derailing hard-won progress. We will continue to monitor developments and advocate for policies that balance environmental responsibility with the economic realities of food production.