Defra secretary Emma Reynolds has announced some important reforms to the Sustainable Farming Incentive (SFI), designed to ‘simplify the scheme, level the playing field and provide stable, predictable delivery’.
Speaking at the Oxford Farming Conference on Thursday, Ms Reynolds said there will be two application windows in 2026, with the first from June prioritising smaller farms and those without an existing agreement, followed by a second round from September for wider applications.
She said the government was also streamlining SFI, with fewer actions, less complexity and making it easier to apply, pointing out that 90% of spending currently goes on fewer than 40 of the 102 actions available.
“We will limit how much land can be put into certain actions and review payment rates for others. These changes will make funding go further, allowing more people to benefit from agreements,” she said.
She said it was not fair that a quarter of the SFI money currently goes to just 4% of farms and that the government was considering ways to address this such as an agreement value cap.
Ms Reynolds said the government will continue working with the sector to refine these proposals, including the definition of a small farm, and full scheme details will be published before the first application window opens.
The Defra secretary also outlined a new £30 million Farmer Collaboration Fund to support farmer groups in growing their businesses, building partnerships and sharing best practice and ’empowering them to find new opportunities to grow their businesses, share what works, build partnerships, and drive the kind of change that comes from the ground up’.
IHT reforms
Ms Reynolds took the opportunity to expand on the surprise announcement just before Christmas that the government has altered its policy on inheritance tax, following a concerted campaign by the farming sector.
“You told me the threshold was too low. You told me it would hit small family farms – the very farms we want to protect,” she said.
“Farms that have been in families for generations. Farms you understandably want to pass on to your children. We have listened and we are making changes – increasing the inheritance tax threshold for Agricultural and Business Property Relief from £1 million to £2.5 million.
“That means couples can pass on up to £5 million pounds without paying inheritance tax on their assets. That’s on top of the existing allowances such as the nil-rate band.
“Around 85% of estates claiming APR, including those also claiming BPR, will pay no more inheritance tax.”
Despite this concession, her speech was accompanied by a loud protest outside the venue by Farmers For Action. She pointedly said, however, that the changes were inspired by constructive discussions with the likes of NFU president Tom Bradshaw, thn the protestors making the noise outside.
She also stressed that there would be no further concessions on the policy.
Planning reforms
Ms Reynolds highlighted the consultation on planning changes launched before Christmas ‘to make it easier to build on-farm reservoirs, greenhouses, polytunnels, and farm shops’ and enable farmers to diversify, adapt and grow.often.
“I’ve heard from many of you that the planning system has stopped you building the vital infrastructure you need. You’ve been held back by bureaucracy. Our government is changing that.”
The Environment Secretary also set out plans exploring a transformation of England’s uplands, recognising the unique challenges facing the rural communities that depend on them, from poor access to services to harsh farming conditions.
“British farming is a key growth sector we’re backing for the long term. Farmers who want to build, to export and to invest in new technology. But too often, they’ve been held back by bureaucracy. We’re changing that to a system that backs our farmers.”
“We will work with you – through our new Farming and Food Partnership Board, through peer-to-peer networks, through community-led change, and through engagement on the detailed changes to SFI.”
Industry response
NFU President Tom Bradshaw said: “It’s encouraging to see the Defra Secretary of State’s real ambition for a thriving agriculture industry, demonstrated by her announcements made today, as well as her commitment to working collaboratively with farmers and growers.
“Domestically, creating policies that support productivity and growth remain key and I am pleased to hear the Secretary of State talk about the much-needed clarity coming ahead of each payment windows for the Sustainable Farming Incentive (SFI). Farming is a long-term investment, measured in years, not months, and clarity is essential for confidence.
“On a global scale, growing exports for British food abroad and ensuring imported products meet our productions standards will ensure our sector can compete on a level playing field.”
NFU Deputy President David Exwood also welcomed the much-needed plans to reform the SFI and a commitment to work collaboratively with farmers and growers.
“But there remains a huge lack of detail that farmers and growers urgently need and this uncertainty continues to undermine farmers’ confidence, ability to invest and do the best for their business,” he said.
Gavin Lane, President of the CLA, said the ‘fight against ‘the family farm tax goes on’. “Government should be congratulated for its partial climbdown, which came as a welcome relief. It was a further acknowledgement that their reforms were ill-thought through and deeply damaging.
“We cannot though, pull back on our campaign to reverse the policy in full, simply because what remains is still so dreadful for the rural economy. We are realistic about what can be achieved in the short term, but will hold all party’s feet to the fire to ensure APR and BPR are, eventually, restored completely.”