The Government’s SFI Announcement: A Reality Check for Farmers and the Urgent Need for Private Sector Mobilisation

The government’s sudden announcement on the Sustainable Farming Incentive (SFI) in England has blindsided farmers. Despite months of assurances that SFI would be the bedrock of England’s agri-environment schemes—available to all and forming a key pillar of farm support—the scheme has now been abruptly closed to new applications. The government’s spin frames this as a success, with the full budget allocated for 2025. In reality, many farmers are seeing this as a betrayal of trust that leaves them without a clear path forward.

The decision will have profound consequences. SFI was meant to provide a stable transition from direct payments to a system that rewards environmental stewardship, but instead, it has become a scramble. Those who had factored SFI into their farm planning will be grateful they got there in time; those who were just building up to consider it will find the rug has been pulled from under them. This is not just an inconvenience—it is a fundamental failure of policy delivery.

In some ways, the revision has been inevitable since summer 2024, when the National Audit Office criticised the weak evidential links between SFI options and statutory targets such as those under the Environment Act 2021, and Steve Reed announced a rapid review of the Environmental Improvement Plan. Combined with weaknesses in scheme design, such as uncapped applications, and now a dramatically different global geopolitical outlook, tough decisions have been imminent.

The Farming Minister said at the Norfolk Farming Conference in February that dependency on public subsidy would always leave farming vulnerable to fluctuations in public finances. Along with changes to the tax regime announced back in October, exposure to greater levels of risk presents a new and concerning reality for farmers.

This turmoil makes one thing clear: government funding cannot be relied upon as the primary driver of sustainable farming. If we want resilient, climate-friendly agriculture in the UK, we need investment from elsewhere. We’re entering uncharted territory, but necessity is the mother of invention.

This is where the government could show some leadership. Much airtime has been given to the role that the private sector, including agri-food supply chains, should play in supporting environmentally beneficial farming, with multiple consultations ongoing on the role of private finance in nature recovery. The absence of robust governance, uncertainty on standards and unclear accountability has hindered progress for too long, but a lack of a compelling vision for the private sector has also been an issue.

The Role of Supply Chains in Mitigation and Adaptation

Food is the ultimate nature-based solution. We may look to ecosystem service markets to deliver investment through offsets, such as biodiversity net gain, but the only way I can make sense of our future farming landscape is to assume that those who are most dependent upon ecosystems contribute fairly to the ongoing cost of making them resilient. Insetting through existing supply chains produces the ‘win win’ that we all need. Unlike other stakeholders, agri-food supply chains have a vested interest in ensuring long-term resilience. Given this moment of deep reflection on the sustainability of public finances, the government now has a window to incentivize supply chain actors to contribute meaningfully. Without this direction, the financial burden for climate and nature investments will fall disproportionately on farmers and therefore may not happen at all.

The work we are doing at Exchange is helping to provide farmers with the tools and knowledge to build resilience in partnership with supply chains who want to invest in better farming. Farmers require practical solutions to secure investment for nature recovery while strengthening their business models. We know that one of the most immediate ways to drive change is for supply chains to financially reward farmers for adopting sustainable practices. Investment through initiatives like the Exchange Market fund enables buyers to contribute directly to sustainable farming efforts. These incentives enable a transition to sustainable farming and economic viability at a fair price to farmers.

Evidence from our work so far shows that benchmarked farmers have improved economic resilience and are more profitable. A resilient farm is one that can better weather financial and environmental shocks, making these strategies essential for future-proofing the industry. Supply chains and landlords now have the primary obligation to do this, and the scientifically objective data to demonstrate impact and ensure that supply is resilient is on hand.

Right now, many farmers will rightfully be considering whether this harvest might be their last. This is a dire outcome and its incumbent on us all to drive for a positive future for farming. Given the critical role farmers play in the economy, they cannot and should not bear the burden and risk of environmental sustainability alone. By mobilising supply chains and accessing diverse funding sources, we can build a more resilient, sustainable future for farming.

The time for action is now.