By Bianca Forte, 2 October 2026

After more than £250 million of Sustainable Farming Incentive (SFI) funding was allocated in less than six hours last week, Defra said it was considering alternatives to the scheme’s first-come, first-served application process. This change is welcome, but the response to SFI26 also raises a broader question.

Farmers have shown strong interest in adopting practices that deliver public goods – as long as they make financial sense. If the biodiversity and climate targets set out in UK policy are to be met, change is needed in mainstream agriculture.

How can SFI make better use of limited public funding to accelerate that change?

The most popular actions in SFI26

Defra’s preliminary analysis of SFI26 shows applications across 14 action groups. The five most frequently selected actions were:

• Managing grassland with very low nutrient inputs (CLIG3): over 7,400 applications
• Managing hedgerows (CHRW2): over 4,300 applications
• Herbal leys (CSAM3): over 3,300 applications
• Winter bird food on arable and horticultural land (CAHL2): over 2,600 applications
• No use of insecticide on arable and permanent crops (CIPM4): over 2,600 applications

These actions have potential to benefit farm businesses as well as the wider environment. For some farmers, however, a financial return beyond the SFI payment may be uncertain or take years to materialise. At the same time, other actions with the potential to deliver a financial return to farmers in the shorter term, but which require demonstration on farm, are not currently supported under the scheme.

Public funding has a vital role to play where farmers cannot capture the full economic value of the environmental benefits they deliver. However, with limited funding available and ambitious national environmental targets to meet, we should also consider whether the actions funded through SFI have a credible route to wider adoption.

Building markets for environmental outcomes

Take grassland managed with very low nutrient inputs (SFI action CLIG3). Flower-rich areas can provide food and habitat for beneficial insects, potentially supporting natural pest control. They can also slow surface water movement, potentially reducing soil and nutrient losses.

Natural pest control and the reduced requirement for nutrient input have an economic value on farm. But whether SFI action CLIG3 generates a financial return for a particular farm, and how soon, will depend on individual circumstances. Farmers cannot be expected to carry the cost of delivering those benefits when the returns are uncertain or lie beyond commercially acceptable timescales.

Markets for environmental outcomes offer a way to bridge that gap by creating a separate source of value for the environmental benefits farmers deliver, even where a direct on-farm return on investment is uncertain. These markets already operate in the UK but are not yet sufficiently mature or dependable for farmers (or buyers) to rely on them.

Government is helping build these foundations through several complementary initiatives. For example, Defra has funded the British Standards Institution’s Nature Investment Standards to improve confidence and consistency in UK nature markets. Through the Natural Environment Investment Readiness Fund, it has also provided grants of up to £100,000 to demonstrate business models that can attract private investment.

While these markets develop, continued public support for valuable environmental actions may be justified. But that support should also help gather evidence on the environmental benefits achieved. That evidence could inform wider government initiatives designed to build trust in markets for environmental outcomes. This would require more strategic use of SFI funding to fill knowledge gaps to support market development.

Making room for new SFI-eligible practices

SFI could also help demonstrate innovations that offer environmental benefits and a nearer-term financial return for farmers. That calls for a more responsive and flexible process for considering new actions as technologies advance and the evidence base develops. Biostimulants offer a useful example to illustrate why this is needed.

There is clear evidence that biostimulants can deliver agronomic and environmental benefits, but performance can vary depending on environmental conditions, crop variety and agronomic practices. Farmers considering a new product therefore bear the cost and risk of establishing whether it works under their particular circumstances.

Time-limited support for independent, farmer-led evaluation could help establish when and where biostimulants perform. Farmers and agronomists could then judge whether those products should earn a place in the crop budget through tangible returns from lower input costs, higher yields or improved grain quality. After two or three seasons, evidence of a consistent economic benefit could become the driver for wider commercial adoption, reducing or removing the need for public support..

The two-question test for SFI

As Defra designs SFI27, it should consider how each type of action can reach scale:

• Some will need public support for longer while private markets develop for the environmental outcomes they deliver.
• Others may need support for a limited period to build the evidence of return on investment that farmers require before adopting them commercially.

Accelerating the adoption of truly scalable sustainable farming

For any proposed new action, two questions should be clear: what outcome does it deliver, and what is the route to wider adoption beyond SFI? Answering both would help public funding deliver lasting impact.