What is the Sustainable Farming Incentive?

If you watched the Queen’s Speech in May, you would have noted the Government’s intention to be the first sitting Government to leave a healthier climate than they found. As part of this commitment, DEFRA is introducing three new schemes to encourage and reward environmental land management.

One such scheme is the Sustainable Farming Incentive. The Sustainable Farming Incentive will reward farmers for managing their land in an environmentally sustainable way and is defined by DEFRA as being “a straightforward way for farmers to get paid for producing public goods”.

Earlier this year, over 2000 farmers were invited to take part in a pilot scheme. The full scheme will launch in 2022, initially for farmers in England who currently get payments under the Basic Payment Scheme.

What goods are considered “public goods”?

The public goods that you could sell within the scheme need to fit into one or more of the following eight areas:

Arable and horticultural soils
Improved grassland soils
Improved grassland
Low and no input grassland
Arable land
Hedgerows
On-farm woodland
Waterbody buffering

How will the process work?

Each area comes with a number of minimum standards. To ensure that you meet the standards required, you must:

Identify your land parcel.
Select which area of the SFI pilot scheme your land will fit into
Decide the level of standards you want to achieve. There are three different levels (Introductory, Intermediate or Advanced) and each level you achieve results in a higher payment.
Receive monthly payments for meeting those standards, and therefore delivering public goods.

Farmers in the pilot scheme will regularly be asked for feedback, so the current procedure could be subject to change.

How might the scheme benefit me?

Through the Sustainable Farming Incentive, farmers are being presented with an opportunity to diversify and grow their businesses. We can connect you with the right people to help you to plan for these changes.

Can I continue with the Basic Payment Scheme instead?

Income paid through the Basic Payment Scheme will reduce yearly, ending completely in 2028. A new consultation paper tells us that there is likely to be options for taking an early exit from the scheme. One such option is to take a lump-sum payment in 2022 for the remainder of the sums owed. The early indications are that conditions are likely to be:

You must have been farming in 2015.
You must sell, give, lease out or surrender your farmland.
The lump sum will be based on payments made between 2018 and 2020 but capped at £100,000.
You can keep your farmhouse and up to 12.5 acres of land.

It is, therefore, theoretically possible to take the payment and farm elsewhere without relying on the schemes. Alternatively, you may consider the lump sum payment as an opportunity to take early retirement, particularly if you have family members ready and able to take over.

Here to help

If you decide to make the most of the early exit option, our expert team of Agricultural Solicitors are here to help with the sale or transfer of your business and land. You can call us on 0161 941 4000 or email the Agricultural Team.