Opening up the new SFI handbook

The gradual iteration of the Sustainable Farming Incentive (SFI) scheme rolls on. This week saw the launch of the SFI handbook – the latest Defra document outlining how the initiative will work.

The SFI launched for the first time in June 2022, with a limited offer of three standards which funded soil and moorland management. Initial take up of the scheme has been muted, with around 3,200 live agreements in place. In January this year, Defra shared information on how they were going to boost interest in the scheme, by introducing an annual management payment and a much-expanded list of SFI actions for farmers and land managers to be paid for in 2023.

The 156-page handbook builds on the January announcement, but also includes important technical changes in scheme design and other updates. These include:

• A change in terminology and design. Defra has moved away from SFI standards and levels of ambition. Instead, the SFI will comprise of separate actions which can be selected in a ‘pick and mix’ approach.
• There are 23 separate SFI actions that can be selected in 2023, with a full list of actions available in 2024.
• Most actions in the SFI 2022 standards have been moved across into the 2023 offer. However, there are three actions in the SFI 2022 soil standard offer which have been removed, as the percentage based land cover requirements blocked participation in the actions on offer in SFI 2023 and beyond.

Applications to join the SFI have been paused until the 2023 standards have been added to the Rural Payments Agency’s (RPA) online system. SFI 2023 will open for applications from August. There will be a phased approach to the roll out to test the systems, as we saw with SFI 2022.

The RPA has begun communicating with the businesses that have already interacted with the SFI 2022 offer. These fall into different categories, including those with live agreements, those that have received agreement offers but not yet accepted, those that have applied but not yet received an offer and those that have started but not submitted an application.

Defra and the RPA have decided that live SFI agreements need to be terminated in the near future. This is because the percentage land cover requirements blocked participation from many SFI 2023 actions and from further actions to be introduced from 2024. The RPA has begun calling existing agreement holders to explain the changes and will be writing to them, providing at least six months notice that their agreement will be terminated. It is not yet clear if this cohort will be able to move across into SFI 2023 before the termination of their SFI 2022 agreement, but the RPA are working on solutions to this. It is possible that some live agreement holders will lose out financially, as a result of Defra removing the three SFI soil standard actions. In these instances, the RPA will honour their paying commitments in the original agreement, and will issue one off ‘closure payments’ when the agreements are terminated.

Those that have either received an offer for the SFI 2022 or have submitted an application will be provided with a choice. They can either accept their SFI agreement or reject it and apply for SFI 2023 when it is made available. If the agreement is accepted, it will start and the RPA will write in the near future, terminating the agreement.

Those who have started applications but had not submitted them by 21 June will not be offered SFI agreements. It is possible that this cohort will be invited in to the SFI 2023 application process early, to test the system.

The CLA welcomes the fast tracking of SFI actions for the 2023 and 2024 offers and is pleased that the full menu of SFI options will be available in 2024. A fast roll out of the SFI is something the CLA has been lobbying for since the concept was introduced.

The simplification of the scheme design, whilst potentially frustrating for those already engaged with the SFI, should avoid complications and make it easier for members to be paid for multiple different actions in the long run. It should be a case of short term pain, in terms of hassle for the SFI early adopters, for long term gain. The fact that there are low numbers of SFI participants means that the impact should be limited.

In terms of the SFI 2023 offer itself, there is a reasonable amount of overlap between the actions and options available in the Countryside Stewardship (CS) scheme. Therefore, for those already participating in schemes, there could be fewer options to choose from. A helpful feature of the handbook is that it details the compatibility between the SFI and CS options.

The exciting element of the SFI 2023 offer is that it contains a list of actions which are being funded for the first time and also allow a crop to be grown. For example, those willing to commit to not using an insecticide on arable or permanent crops, can benefit from a £45/ha payment. We have felt considerable eagerness from our members since the payment rates for the SFI 2023 actions were released in January and anticipate a healthy level of interest when applications open in August.