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The Sustainable Farming Incentive

DEFRA has announced further detail on the Sustainable Farming Incentive (SFI) Scheme for 2022. Here, David Morley, Head of Conservation & Environment for H&H Land Estates, looks at the detail and discusses his concerns.

“SFI is the first component of the new Environmental Land Management (ELM) Scheme to be launched and its aim is to:

  • Enhance the health and fertility of soils
  • Contribute to carbon net zero targets
  • Assess the current environmental condition of moorland, and its potential to deliver public goods, such as clean water, clean air, enhanced biodiversity, adaptation to climate change and flood mitigation.

For the next three years, SFI will be open to all farmers currently claiming BPS who have at least two years’ management control on the land they farm. It will be a land parcel-based scheme, rather than a whole-farm scheme, so farmers can enter as much land into the scheme as they choose. They will be able to apply for SFI on land already in other agreements, provided they are not being paid twice for the same thing.

SFI 2022 will include three elements:

  • Arable soils standard
  • Improved grassland soils standard
  • Moorland & rough grazing standard

Each “standard” groups together actions that DEFRA thinks is appropriate for that land, into a package. Within the soil standards there will be two levels of ambition – Introductory and Intermediate; an Advanced level will be added in 2023. The Moorland standard will only have an Introductory level for the time being.

  1. Arable & Improved Grassland Soil Standards

Since the previous SFI announcement, the things that farmers will need to do to access these payments have become more demanding. For the Introductory level of the Improved Grassland Soils Standard, farmers will need to:

  • Undertake a basic soil assessment
  • Test the level of soil organic matter at least every five years
  • Draw up a soil management plan
  • Maintain a green cover on at least 95% of the scheme area throughout the winter (from the start of December to the end of February)

To move to the Intermediate level, a mix of grasses, legumes, herbs and wildflowers will need to be established on 15% of the land entered into the scheme.

The definition of what constitutes “improved grassland” is still not clear. The fact that DEFRA is proposing a “low and no input grassland” standard for 2024 suggests that grassland managed with few inputs may be excluded, even though it may still have been improved. If that is the case, farmers who have entered land into “low input grassland management” options in Countryside Stewardship may have unwittingly made that land ineligible for SFI, which is surely not the intention of the scheme. More clarity on this point is urgently needed.

For the Introductory level of the Arable Soils Standard, farmers will need to:

  • Undertake a basic soil assessment
  • Test the level of soil organic matter at least every five years
  • Draw up a soil management plan
  • Establish a green cover on at least 70% of the scheme area throughout the winter (from the start of December to the end of February)
  • Take measures to increase soil organic matter on at least a third of the scheme area

To move up to the Intermediate level, farmers will need to establish a multi-species green cover on 20% of the land entered into the scheme (included within the 70% mentioned above).

SFI agreements will be three years in length, but can be amended each year to increase (but not reduce) either the area of land involved or the level of ambition. That means if farmers are unsure as to how much land they want to commit to the scheme, they should start small and see how it goes, in the knowledge they can always add more later.

  1. Moorland & Rough Grazing Standard

The requirements of the Moorland & Rough Grazing Standard are still not finalised. However, it will probably involve undertaking a survey to assess the range and environmental condition of habitats and other features, including recording soil types and peat depth. There will also be a need to evaluate the potential to provide a range of public goods and identify opportunities to maintain or enhance these public goods at each annual review.

The proposed payment is £148 per agreement per year plus an area rate of £6.45 per ha, which seems very low, given the amount of work involved. DEFRA say they will provide training to enable farmers to undertake the assessments themselves but, frankly, it is hard to see how farmers will have either the time or the expertise for the scale of assessments that will be needed.

Common land can be entered into SFI, provided Basic Payment (BPS) has been claimed on the common by one or more rights holders in the last two years. However, applications must be made by the commoners collectively and payments will be made to them as a Group, not to individual farmers, as is the case with BPS. Therefore, SFI agreements on common land could require an internal agreement between all parties to set out the legal basis for the payment split. It will be necessary to attempt to notify all those with a legal interest in the common of an intention to apply for SFI before an application is made.

Clearly, this is going to add a significant additional cost to SFI agreements on common land, which is hard to justify when the payment rate is so low. DEFRA recognises this and has said that additional funding will be available, although there are no details on this yet.

Applications & Payments

There will be a ten-week application window for SFI, although DEFRA have not said when the window will be. If it coincides with the application windows for BPS or Countryside Stewardship, it will place a significant additional burden on farmers and agents acting on their behalf. A rolling application window would have been preferable, as it would allow time to develop better thought-out applications, which in turn would deliver greater and faster environmental improvements.

On the positive side, and something which will help with farmers’ cashflows, is that payments will be made quarterly in arrears, rather than annually.

Provided the requirements are not too onerous, SFI has the potential to provide a useful income on farms with arable land or improved grassland, as well as improvements to the nation’s soil health. So here at H&H Land & Estates we recommend that all farmers should consider making an SFI application when the window opens next year.

For professional advice regarding SFI and other rural grants and schemes, please contact one of our land agency teams to book a consultation: 

Carlisle - 01228 406260 or [email protected]

Durham - 0191 370 8530 or [email protected]

Kendal - 01538 721375 or [email protected] 

Payment rates for SFI

Indicative payment rates per hectare for the standards are as follows: