DEFRA Announcement: SFI 2026

Below is our summary of the key changes to SFI 2026, Capital Grants and the Farming Equipment and Technology Fund (FETF), and what they mean for your business.

Sustainable Farming Incentive (SFI 2026)

Defra has streamlined the scheme for 2026, with notable adjustments that will influence planning, eligibility and payments.

Key Changes

• 71 actions available (reduced from 102 under SFI 2024).
  Lower‑uptake or lower‑benefit actions have been removed to simplify the scheme.
• £100,000 annual cap per farm business, with one agreement allowed per business.
• Rotational actions cannot exceed the area declared in Year 1.
• Enhanced overwinter stubble is now subject to a 25% area cap, combined with other capped actions.
• Agreement lengths reduced from 5 years to 3 years for many actions.
• Payment rate changes, including:
  • Increases for moorland grazing and shepherding actions.
  • Reductions for Herbal Leys, Winter Bird Food, and Legume Fallow.

Application Windows

There will be two application windows, both expected to be competitive:

Window 1 – June 2026

• Open for around 2 months (may close earlier if budget is fully allocated).
• Eligible businesses include small farms (3-50ha) and farms without an existing RPA‑administered ELM revenue agreement.

Window 2 – September 2026

• Open to all farms.
• Duration will depend on remaining budget.

With capped funding and high expected demand, early preparation will be essential.

Capital Grants 2026

A new round of Capital Grants will open in July 2026, with a funding uplift from previous years.

Key Details

• £225 million total funding (up from £150 million in 2025).
• Supports one-off environmental investments, including:
  • Tree planting
  • Hedgerow restoration
  • Water quality improvements
• Defra will provide public updates once 25%, 50% and 75% of the budget has been allocated, meaning funds may move quickly.

These grants continue to offer valuable support for long term environmental enhancement and infrastructure improvements.

Farming Equipment and Technology Fund (FETF) 2026

The 2026 FETF opens on 17th March, offering funding to boost productivity, improve welfare standards and support better environmental management.

Total Funding: £50 million

• £20 million – Farm productivity
• £20 million – Animal health and welfare
• £10 million – Slurry management

Eligible Items (examples)

A total of 290 items are eligible for funding, including:

• Mobile sheep handling system – Grant: £4,880
• Manual cattle crush – Grant: £1,728
• Direct drill – 50% of item cost covered
• Rainwater harvesting for crop irrigation – 50% of item cost covered

This remains a competitive scheme, with popular items often seeing rapid uptake.

What This Means for Your Farm

The 2026 announcements offer a clearer structure for environmental funding, but also introduce new constraints, particularly around scheme caps and tight application windows.

With windows likely to fill quickly and agreement rules becoming more defined, forward planning is essential. We strongly recommend engaging with your local Batcheller Monkhouse advisor as early as possible to ensure your business is well positioned for SFI 2026, Capital Grants and FETF.

Get Support From Our Team

Our rural professionals are ready to help you assess your eligibility, maximise funding opportunities and prepare strong applications.

• Harry Broadbent‑Combe, Director – Surrey Hills. Email h.broadbent-combe@batchellermonkhouse.com.
• Sophie Lawes, Surveyor – Pulborough. Email s.lawes@batchellermonkhouse.com.
• Chris Tipping, Director – Haywards Heath. Email c.tipping@batchellermonkhouse.com.
• Emer Edwards, Associate – Tunbridge Wells. Email e.edwards@batchellermonkhouse.com.

Please contact your nearest office for more information or to discuss the best options for your farm.