National Sheep Association's shock at abrupt closure of flagship payments scheme

In Defra’s words, the government could no longer run an ‘uncapped scheme with a finite farming budget’.

NSA is concerned many farming businesses still diligently testing and checking how SFI options would impact or complement their sheep system will now have fallen through a crack in payments between the reduction of the Basic Payment Scheme (BPS) and SFI being stopped.

In response, NSA Chief Executive Phil Stocker said: “This latest Defra announcement feels disastrous – a word I don’t use lightly.

"I’m seriously concerned many farms will now face 2025 with an accelerated decline of BPS income – and no access to SFI which for most farmers will be the main plank to replace that money.

“Whether we like it or not many farms are financially dependent on government-funded income streams and, with this SFI suspension, and a whole range of other financial pressures, it feels like we are approaching our ‘New Zealand moment’ with a potential restructuring of our farming industry and the phasing out of agricultural support." The NSA considers that the shock move indicates poor scheme design and management and is in disbelief how Defra has arrived at this position and not stepped in to manage it earlier.

Mr Stocker added: “SFI was intended to be a non-competitive scheme which suggested it would be available for all with no cut off point. The Government’s target was for more than 70% of land and 70% of all farms to be covered by 2028. However, the SFI scheme has stopped at little over 50% of farms, with less than 38,000 agreements live.

“The stop/start nature of these funding streams is disastrous and will lead to farmers becoming completely disillusioned with their engagement with Defra and the Rural Payments Agency (RPA).

"It was only a week ago the capital grants restarted and now, with no advance warning, the main plank of BPS replacement for many farms is being taken away.

“Upland and lowland farms that are not yet part of SFI, but that were intending to be this year will be seriously affected. For many in the uplands when considering this latest removal of support with the decline of BPS, the situation could be life changing.

"Cash flow on these farms in 2025/26 will be seriously compromised and there will be a question over how supportive the banks will be and whether farms will be able to climb out of the financial hole this will leave.

“For all the co-design and warm words that Defra want a different relationship with industry – this will just about destroy all that has been built over the last five years. Coming back from this will be hard.”

Environment Minister Daniel Zeichner, when asked to say when ministers knew the scheme would need to close, told the Commons: “If you have a first come first served scheme, people have known for weeks and weeks and weeks, months, that it’d be full at some point.

“There comes a point where you have to make a decision and if you’re working within your budget properly, you can hardly say a week or two before that suddenly it’s going to close because you then get a spike in applications.

“It’s like a run on the bank and I’m afraid basically when the scheme is finished, it’s finished.”