Sustainable Farming Incentive - A digested summary

Thu 06 Jan 2022

Tim Harris, agricultural associate, Shouler & Son, has fully digested the available detail of last month’s SFI (Sustainable Farming Incentive) Defra policy document and provides an entrée for those contemplating applying this year.

Finally, Defra set out how the Sustainable Farming Incentive (SFI) will work this year (2022) through the release of its delayed policy paper in the final month of last year.

But, frustratingly, we still await the finer details ahead of the anticipated opening of the application window this spring.

Shouler & Son will be advising clients on the more granular detail of each of its known aspects as they become available but, in broad terms, the SFI provides farmers with the opportunity to start implementing environmental measures and familiarise themselves with the scheme at its outset.

SFI agreements will last for three years with participants having the flexibility to amend them every 12 months from the start date. This affords the opportunity to increase coverage - and ambition - over time, through adopting any future, additional SFI standards.

Farmers will be paid in quarterly instalments from the start date of the SFI agreement.

The scheme will operate at land parcel level, with farmers able to pick and choose which of their fields to include rather than having to enter their whole farm.

With no minimum or maximum amount of land that must be entered, this provides a way of entering into the new scheme without the need to go ‘all in’ from the beginning.

SFI agreement holders will need to have management control of the land for the duration of their three year agreement. There is the provision to withdraw the land from the agreement at the 24 month mark with no penalty or recovery of earlier payments applied.

As a transitional measure in 2022, farmers having between two and three years left on their tenancy will still be able to enter land into the SFI.

However, those with less than two years left on their tenancy or having access under a licence arrangement should not apply, as the environmental benefit over any period less than two years is not deemed worthwhile.

As it stands, land that is already within a private sector scheme - such as carbon trading or biodiversity net gain credits - should be able to enter land into a SFI, subject to any rules and regulations of schemes in situ.

Last autumn, we correctly (https://bit.ly/32UdojM) anticipated the 2022 SFI Standards having a particular focus on soils, with payments being made for actions that go beyond good practice and regulatory requirements.

As published in December’s SFI paper, the arable and horticulture soils and improved grassland soils standard can be chosen at an introductory or immediate level and we also understand advanced levels will be added in 2023.

The other environmental standard will be for moorland and rough grazing standard but this is not something to concern our client base in Leicestershire, Rutland and Lincolnshire.

In addition to these environmental standards arriving this year, there is also the annual health and welfare review. This sees the SFI fund a yearly farm visit from a vet or vet-led team and will be available to all farmers currently eligible for Basic Payment Scheme (BPS) with more than 50 pigs, 20 sheep or 10 cattle.

As we begin to march down the ELMS (Environmental Land Management Scheme) road in earnest with our farming clients, and with larger BPS percentage reductions already kicking in, this year’s introduction of the SFI at least provides farmers with the opportunity for some ‘clawback’ to replace a proportion of lost BPS income.

For more information on the SFI and Shouler & Son’s rural services, contact one of our rural team, tel 01664 560181 or through shoulers.co.uk.