SFI 2027: what will replace first come, first served?

SFI 2027 is coming, and the race to apply is gone. Defra has confirmed there will be a Sustainable Farming Incentive offer in 2027 and that first come, first served is being scrapped. What it hasn't said yet is when SFI27 opens, how big the budget is, or what will decide who gets an agreement.

This post covers what we know about SFI 2027 so far, the options Defra is weighing to replace first come, first served, our view on what's most likely, and what you can do now to be ready.

What we know about SFI 2027 so far

Four things are confirmed. Everything else is still being decided.

• There will be an SFI27 scheme. Ministers have committed to an SFI offer in 2027 and to keeping the main design of SFI stable for the rest of this Parliament (FarmingUK).
• First come, first served is going. Farming Minister Stephen Morgan confirmed this again at the AIC conference on 11 November, saying Defra is working with the NFU and others on what replaces it (Farmers Guardian).
• It will open "as early as possible". That is the official line. No date has been given.
• No budget has been set for SFI27. Defra's indicative figures show around £1.95bn a year for all Environmental Land Management (ELM) schemes in 2026-27 and 2027-28, but that covers more than SFI (Farmers Weekly).

What we don't know yet: the opening date, the SFI27 budget, the list of actions and payment rates, the agreement cap, and how applications will be prioritised.

Why first come, first served failed in SFI26

SFI26 Window 2 opened on 22 September and its budget of around £250m was gone in under six hours. Around 12,200 applications got in, and Defra officials estimated more than 10,000 more farmers wanted to apply but couldn't (Farmers Weekly).

The problem was simple: demand was far bigger than the money. Defra's Mike Rowe put it plainly at a Tenant Farmers Association webinar in October: the funding for new agreements "clearly was not enough to meet demand" (Farmers Weekly). The minister later told MPs Defra knew the budget was unlikely to cover everyone.

When money runs out in hours, the farmers who get in are the ones at a computer at 10am, with clean maps and no system errors. Not the ones whose land or plans are best suited to the scheme. That is what Defra now has to fix.

What could replace first come, first served?

Defra has shared a shortlist of options, and farming groups have added their own. In October, Defra listed filtering applications up front by priority, scoring applications on what they deliver, cutting the number of actions, lowering payment rates with more area limits, and reviewing the £100,000 agreement cap (Farmers Weekly). Here's how each option, and a few others, would work for farmers.

1. A fixed application window

Applications open for a set period, say six to eight weeks, and nothing is decided until the window closes. Speed stops mattering. On its own this doesn't solve the budget problem, so it would be paired with one of the options below. Expect this almost certainly.

2. Priority groups

Some farmers get in first or get ring-fenced funding. Likely candidates are farmers with expiring Countryside Stewardship or Higher Level Stewardship agreements, small farms, farms with no current ELM agreement, tenants, upland farms and common land. SFI26 Window 1 already worked this way. At the other end, we'd expect farmers who already hold an SFI26 agreement to go towards the bottom of the list, so funding reaches those with no current support first. It's easy for the Rural Payments Agency (RPA) to run, so it's very likely in some form.

3. Scoring applications on merit

Applications are ranked on the environmental value they deliver, for example how well actions fit a Local Nature Recovery Strategy or a priority catchment. This is how Countryside Stewardship Higher Tier works. It's fairer on paper but slow and harder to understand, and difficult at the scale of 40,000+ applications. A simple points system is possible; a full Higher Tier-style assessment is less likely.

4. Lower payment rates (the riskiest option)

Everyone eligible gets in, but rates are cut so the budget stretches further. Defra could set lower rates before the window opens, or scale everyone's payments down once it knows total demand.

This is the option farmers should worry about most. SFI payment rates are calculated on the cost of delivering each action plus the income foregone, such as the lost margin from taking land out of crops. They aren't a profit. Cut the rate and many actions would cost more to deliver than they pay, leaving farmers to fund environmental work out of their own pocket.

That's a real risk for farm businesses, with agreements running for three years and cash flow already tight as delinked payments wind down. It's a risk for Defra too. If actions don't pay, uptake falls, the higher-cost actions that often do most for nature are dropped first, and the scheme falls short of the environmental targets it exists to deliver. Scaling payments down after the window would be worse still, because farmers wouldn't know whether an action pays until after they'd committed to it.

5. A lower cap or tapered payments

The SFI26 cap was £100,000 per agreement. Defra could lower it, or taper payments so the full rate applies up to a set area or value and a reduced rate applies above that. This spreads money across more farms and is likely in some form. Larger farms would be pushed towards Higher Tier for the rest.

6. A per-hectare budget for each farm

The NFU wants funding allocated on a £ per hectare basis so as many farmers as possible can take part (NFU). Each farm would get a ceiling based on its area and choose actions within it. It's predictable and easy to plan around, though critics will say it pays for area rather than results.

7. A ballot

Eligible applicants go into a random draw. It's cheap and gives everyone the same chance, but losing a lottery is a hard thing to explain to a farm business. Unlikely, except perhaps as a tie-breaker.

8. A reverse auction

Farmers bid the payment they'd accept to deliver an action, and the best value bids win. Used for conservation contracts in the US and Australia. It's complex and the RPA isn't set up for it, so it's very unlikely for 2027.

Reducing demand instead

Defra can also shrink demand rather than ration the money: fewer actions on offer, as it did for SFI26, or steering farmers towards Countryside Stewardship Higher Tier. Defra is already encouraging people who missed out on SFI26 to look at Higher Tier.

What SFI27 is most likely to look like

Our best guess is a combination: a fixed application window, priority groups with expiring agreements near the front, a lower or tapered cap, a shorter list of actions, and possibly lower rates on a handful of actions. Across-the-board rate cuts would leave many farmers delivering at a loss, and we'd expect strong pushback against them.

Why that mix? Defra has promised to keep SFI's main design stable, and whatever it picks has to work on the RPA's systems at scale and in a few months. Full merit scoring and auctions need time and capacity that aren't there for a 2027 launch.

On timing, the NFU is pushing for SFI27 to open in early 2027 so agreements can start from 1 April (NFU). Defra announced the SFI26 windows at the Oxford Farming Conference in January 2026, so another January announcement wouldn't be a surprise. That's our view, not anything Defra has said.

On budget, the NFU estimates more than £1bn is needed, with around 48,000 farmers likely to apply and roughly £960m freed up from expiring agreements (NFU). Defra says it has to work within its Treasury settlement. Expect demand to outstrip supply again, which is exactly why the allocation method matters.

How to prepare for SFI 2027 now

Whatever Defra picks, a ready, accurate application will count for more in SFI27 than speed did in SFI26.

1. Check your land parcels and maps. Mapping errors blocked SFI26 applications on the day. Fix your Rural Payments maps and land use now, not when the window opens.
2. Know when your current agreements end. If you have an SFI, Countryside Stewardship or Higher Level Stewardship agreement ending in 2027, you may fall into a priority group. Write the dates down.
3. Plan your actions before the rules are final. Work out which actions fit your land and how they stack. You can adjust once rates and caps are confirmed, but you won't be starting from scratch.
4. Work out whether SFI still pays. If rates or caps come down, compare payments against what each action really costs you to deliver.
5. Look at Higher Tier too. If SFI27 is oversubscribed or capped, Countryside Stewardship Higher Tier may suit some of your land better.
6. Watch for the announcement. Defra's Farming blog, the RPA and the farming press will carry it first.

Sources

• Defra considers ways to avoid another SFI debacle, Farmers Weekly, 22 October 2026
• NFU demands £1bn SFI27 budget after SFI26 chaos, Farmers Weekly, November 2026
• First come first served scrapped for SFI27, Farmers Guardian, November 2026
• NFU calls for £1bn SFI27 budget, NFU, 11 November 2026
• How the NFU is fighting for a better SFI, NFU, updated 11 November 2026
• SFI Window 2 set for September, FarmingUK