Insight

Review of The Sustainable Farming Incentive

21.9.23

Announcements on the next set of Sustainable Farming Incentive (SFI) Actions are long overdue, with some future Actions yet to be confirmed. However, the recent release of the 2023 SFI Handbook is very welcome as it offers land managers a more flexible and simplified opportunity to receive payments.

Bidwells’ Jessica Malings discusses some of the detail within this Handbook.

Overview of handbook

Finally, after months of growing frustration, farmers, landowners and land managers now have clarity on the detail of the SFI Actions - how the application process will work and what the payment rates will be. This will enable land managers to receive payments for adopting and maintaining sustainable farming practices that protect and improve the environment. It will only partially fill the gap left by the reduction in the Basic Payment Scheme (BPS), but it will provide some additional income, although it is not ‘money for nothing’.

Not surprisingly, the changes to the Government’s Environmental Land Management (ELMs) strategy and roll-out of the SFI 2023 offer has been far from easy to follow and the devil really has been in the detail. It does, at last, seem that this Government has listened to feedback from farmers/land managers and those who have invested valuable time being involved in the pilot schemes. The Actions do seem to be ‘less prescriptive’ than comparable Options within the Countryside Stewardship Schemes (CSS) currently available, with similar if not the same payment rates.

The recent announcement confirmed that the 2022 SFI application window is now closed and those that signed up for the SFI 2022 will be contacted by the Rural Payments Agency (RPA) to have their options explained. DEFRA reiterate their commitment that the early adopters will not lose out as the scheme develops further. It is expected that the early adopters will fully benefit from improvements in the 2023 offer.

One key difference between the 2022 SFI Standards and the 2023 SFI Actions is the ability to ‘Pick and Mix’ from the 23 Actions on offer; the 2022 version provided ‘packaged’ Standards with differing ambition levels but with the requirement to carry out all Actions within the Standard to receive the payments. This proved harder for some land managers than initially envisaged and the payment rate was not attractive in many cases.

There will also be the ability to ‘stack’ different SFI Actions on the same parcels of land and to also have CSS Options in the same parcel if these Actions and Options are compatible and not offering the same aims. For example, SFI Action ‘AHL2 – Winter bird food on arable and horticultural land’ cannot be in the same place as CSS Option ‘AB9 – Winter Bird Food’.

The online application tool will calculate what land is eligible for the area-based SFI Actions chosen for each parcel. Although this may seem easier than old style agreements, it is vital that the digital maps are up to date since the land use code declared under the BPS 2023 application will be used. Prior to August it is key for land managers to double check the field boundaries and land use codes and notify the RPA of any changes required.

Common land will have an additional payment of £6.15 per hectare land entered into its own SFI Agreement. The payment is available to single entities involving a group of 2 or more people entering common land into the SFI and aims to offset the cost of administrating an SFI agreement on common land.

The additional annual ‘management’ payment of up to £1,000 will continue to be on offer for each farm business. This is to recognise the management and administrative costs of entering into and then managing an SFI agreement. The exact payment will be based upon £20 per hectare on the first 50 hectares entered, this does exclude land under IPM1 and NUM1 (details below).

Sustainable Farming Incentive – Positives

We can now see, and understand, what is going to be paid for Actions and how to meet the action aims. It should be noted that throughout the Handbook, the required management for the Actions that are a variation of a CSS Option, for example Winter Bird Feed, are substantially less prescriptive within SFI. For example, the minimum area has been removed; however, there are some new prescriptions, so it is vital to look at the Actions and make sure these are achievable.

The overall vision of the RPA is to be flexible, and several Actions include the following text: ‘you must do what is required in the SFI actions, but it is up to you how you complete them as long as you do it in a way that can reasonably be expected to achieve the action aim. This is so that you make the Actions work for your farm’.

Under Section 5.3 of the Handbook, the approach of the RPA is to be ‘new, supportive and pragmatic', when checking compliance with the agreement; the RPA states that they will offer ‘advice and guidance’ to fix issues.

SFI agreements will run for 3 years compared to the 5 years of CSS, and tenant farmers may enter without landlord’s written consent (subject to tenancy terms), even where tenancies are continuing annually, provided the tenant expects to have “management control” for the 3-year period.

Sustainable Farming Incentive – Concerns

With 23 simplified Actions on offer, SFI 2023 is a vast improvement on the scheme that was initially expected in 2023; however looking at the detail, the types of Actions on offer lack imagination, with about 15 Actions being a variation on current CSS Options or SFI 2022. Another 30 additional Actions are proposed for schemes in 2024, to include further Actions for grassland, woodland, boundaries, waterbodies, agro-forestry, moorland actions, precision farming and tillage practices. One will need to monitor the proposed Actions closely to make sure these can be utilised on farm when available.

In addition, the controlled/phased rollout, which was expected to begin from August, was rather vague given that there were decisions to be made to apply for a CSS agreement prior to the deadline of 15th September. Businesses undergoing changes of structure or creating new SBIs for non-grant reasons will need to wait until ‘at least 2024’ to apply, this again is vague as it could be the end of 2024 before these businesses will be able to apply and therefore, they may well miss out.

Analysis & Viewpoint

We can only welcome the freedom to manage these Actions in a way to suit the individual farms but are looking forward to helping to interpret the vague statements throughout the Handbook and hope that these rules are not interpreted in differing ways when it comes to compliance with the actions. We await to see the new ‘pragmatic’ approach to breaches in practice and hope the ‘supportive’ stance is followed through.

It is worth all farmers/land managers considering this SFI offer and how it may benefit individual farms. However, given that details of further environmental opportunities are still largely unknown, careful consideration will need to be given to deciding what direction to take. It could be that for complex schemes the CSS route will be best, whereas for simpler schemes the SFI is more than likely the way forward. There could be situations where a combined CSS and SFI application would fit or where SFI Actions could be added to eligible land parcels within a current CSS agreement. Careful on-farm management will be required to ensure compliance with the schemes.