The Sustainable Farming Incentive – Setting off down ELMS Road

Thu 02 Sep 2021

Last Autumn DEFRA released their policy paper entitled “The Path to Sustainable Farming: An Agricultural Transition Plan 2021 to 2024”. This plan set out the changes that were made to agricultural policy in England from the 1st of January and what it means to you as farmers.

The biggest change to agricultural policy in half a century has therefore already begun. As you will already know, the greening and three-crop rule disappeared from this year’s Basic Payment Scheme (BPS) applications and within the agricultural transition period, Direct Payments will be reduced each year before ceasing entirely in 2027. In the immediate future, we cannot stress how important it is that all our farming clients factor in their 2021 and 2022 BPS payments being reduced by the following percentages on a proportionate basis, with the biggest reductions seen in the higher payment bands:

Payment band 2021 BPS Year 2022 BPS Year
Up to £30,000 5% 20%
£30,000 to £50,000 10% 25%
£50,000 to £150,000 20% 35%
More than £150,000 25% 40%

DEFRA’s aim between 2021 and 2028 is for the money saved in Direct Payments to be used to support agriculture in different ways, with farmers instead of being paid to improve the environment, plant health, animal welfare and to reduce carbon emissions. To achieve this it is intended for there to be three levels of support, these being paid for a) sustainable farming practices, b) creating habitats and c) making landscape-scale changes. Significant grants are also to be made available to aid farmers to reduce costs and increase profitability, to assist those wanting to retire or leave the industry altogether, and to create new opportunities for those wishing to enter the industry. It is therefore hoped that these new payments and grants, along with a fresh approach to farming regulation and enforcement, will support the agricultural sector in achieving the government’s ambitious target of reaching Net Zero carbon emissions by 2050. We will be on hand to update you with further details of these payments and grants as they are introduced throughout this transition period. 

Looking to the near future, I would encourage all our farming clients to be aware of the Sustainable Farming Incentive (SFI), which is set to be introduced from 2022 to 2024. 

At the end of June DEFRA Secretary George Eustice announced details of the SFI offer that will be available to all Basic Payment Scheme (BPS) claimants in 2022.

The SFI is to pay farmers for “environmentally sustainable land management actions” that any farmer should be able to implement. It will be open to all farmers and is designed to be simple and straightforward, with all those currently in receipt of BPS being eligible. It is the first of three Environmental Land Management Schemes (ELMS) that will also include Local Nature Recovery and Landscape Recovery, with these two latter schemes being launched in 2024.

The SFI’s aim is to accelerate the large-scale adoption of more sustainable approaches on all types of farms, with the scheme being designed to be accessible, relevant and attractive to the widest possible range of farmers. This is to be achieved through the creation of different “standards”, which will be linked to particular payment rates dependent upon the environmental management complexity required. The message from DEFRA is to get on board, with the aim of having 70% of farmers in the SFI by 2028.

The 2022 SFI standards will comprise of:
  • Two soil standards, one for arable and horticultural soils and one for improved grassland soils, with farmers rewarded for implementing management practices that improve soil health. Farmers will be able to tailor the standard to their chosen ambition, choosing whether to go for an introductory, intermediate or advanced level. If they then complete all the land management actions required in that standard level they will receive a payment. 

    The indicative payment levels recently released by DEFRA show what farmers can realistically expect to achieve. For example, the payment rate for improving arable and horticultural soils will start at £26/ha (introductory level) to £60/ha (advanced level). Similarly, the payment rate for improving grassland soils will start at £26/ha (introductory level) to £70/ha (advanced level). 
  • An introductory moorland and rough grazing standard, which will require farmers to assess a range of habitats and features present on their individual moorlands. This standard and payment rate is currently still under review and is not set to be finalised until November this year.
  • The animal health and welfare review, whereby DEFRA intends to fund three years of yearly visits from a vet or vet-led team to improve animal welfare and increase productivity. Farmers that claim BPS will be eligible so long as they have commercial holdings with more than 20 sheep, 10 cattle or 50 pigs. The payment rate is again under review and will be finalised by November this year.

Applications for the SFI are to open in Spring 2022 and the first payments will be made before the end of that year. DEFRA have advised that they will be developing elements of the scheme further this summer and that we should expect a final version of the 2022 standards by November, followed by further options in 2023 and 2024. We will continue to keep a close eye on developments in order to update you further this Autumn and be your first port of call when the SFI is introduced.

Tim Harris
Agricultural Assistant


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