EU Exit Perspectives: The Sustainable Farming Incentive – what’s in it for me?

Friday, 12 March 2021

This week, our senior strategic insight manager Sarah Baker takes a look at Defra’s recent announcement of a pilot scheme for its Sustainable Farming Incentive, one of three new schemes to encourage environmental land management as we transition from direct payments.

Talking to many farmers, what is top of mind right now is what will be in the detail of the new agricultural policy schemes in England and the devolved nations, when will they be announced, and how they can participate. So, it was good news to have some further information released this week by Defra for the Sustainable Farming Incentive pilot scheme in England. Expressions of interest for the pilot will be open from 15 March 2021.

As we know, Direct Payments (DPs) are being phased out, as detailed in the Agricultural Transition Plan (ATP). To calculate how your individual business’ DPs will be affected, you can visit the AHDB Business Impact Calculator.

The Sustainable Farming Incentive is the first of three schemes to be piloted and co-designed. Further information on the other two schemes, Local Nature Recovery and Landscape Recovery, is expected to be shared later this year.

With DPs being reduced from this year (2021) it makes commercial sense for farmers to consider taking part in the pilot of the Sustainable Farming Incentive.

The pilot application window opens in June 2021. It will build on the ongoing programme of tests and trials, which already involve over 3,000 farmers and other land managers. Tests and trials focus on trying out individual parts of the future scheme, like land management plans or different payment methods – whereas the pilot will test a working version of the scheme from start to finish.

From October 2021, Defra will pilot some of what will be included in the full Sustainable Farming Incentive scheme offer.

The main groups involved in piloting will be:

  • Farmers and land managers, who will be at the heart of learning, with a strong emphasis on keeping it simple and getting the basics right. Defra says it wants a scheme that makes sense and is attractive, giving farmers and land managers space to produce public goods in ways that works for them and the environment
  • Pilot scheme administrators from the Rural Payments Agency, who will refine and simplify systems and processes
  • Advisers, for example those hired by participants to help plan and implement Sustainable Farming Incentive activities
  • Stakeholders, for example, groups representing the farming and environment sectors

There will be an initial set of eight standards in the pilot which farmers can choose from. Within each standard are three ‘levels’: introductory, intermediate and advanced. Each level is more challenging and more rewarding than the previous. In addition to the base rates shown below, there are also additional payments available for certain actions where there is an environmental priority. It is worth noting that not all farms will have land that qualifies for these additional actions.

Defra have released indicative payment rates for each standard level as follows;


Introductory rate

Intermediate rate

Advanced Rate

Arable and horticultural land standard




Arable and horticultural soils standard




Improved grassland standard




Improved grassland soils standard




Low and no input grassland standard





Hedgerow standard




On farm woodland standard

£49/ha (only one standard)

Waterbody buffering standard





An overview of the type of actions available to participants and the intended outcomes can be found in Annex 1.

Defra is keen to recruit a range of several hundred farmers and land managers from across England who have the capacity (on top of everything else they are doing) to commit to specific learning activities and provide timely, regular and comprehensive feedback on the pilot version of the Sustainable Farming Incentive scheme. 

For the first phase of piloting, a farmer is only eligible if they:

  • Are a recipient of the Basic Payments Scheme, registered on the Rural Payments Agency system
  • Enter land parcels (for example, fields) into the pilot that do not have an existing agri-environment agreement on them
  • Have management control of the land for the duration of the pilot (scheduled to run until late 2024). They must either own the land with management control or have a tenancy of enough length to implement their pilot agreement (including landlord’s permission if required)
  • Enter land parcels that are in England
  • Enter land parcels that are not registered common land or shared grazings

The Sustainable Farming Incentive scheme will be launched nationally in mid-2022. Though initially it will only be open to farmers who currently receive payments under the BPS, over time it is intended intend to open up the scheme, so that it is both accessible and applicable to a broader range of farmers.

The scheme will give farmers an opportunity to secure a complementary income stream to their farm business by undertaking sustainable farming actions that benefit the wider environment. This is important, as AHDB’s analysis of the reduction of DPs over the Agricultural Transition Period indicates that it would be prudent for all sectors, but in particular grazing livestock and cereals, to prepare for the loss of DPs and to plan accordingly how this shortfall may be addressed.

Ultimately the schemes are part of the effort to meet ambitious environmental targets, set out in the Government’s 25 year Environment Plan, effectively and in a timely manner. The earlier you get involved with the schemes, the more your input and feedback can help shape them and ensure they are well designed and attractive enough to farmers and growers in the future.

Check out our other EU Exit Perspectives blogs