What is the Sustainable Farming Scheme (“SFS”)?

The SFS is a payment scheme that is available to Welsh farmers starting from January 2026, in which eligible farmers can claim subsidies (i.e. funding) from the Welsh Government based on how much land the respective farmer owns (the “Scheme”).

The Government has committed to a £238 million budget in 2026 for the SFS and any remaining BPS payments. Therefore, it is imperative that farmers familiarise themselves with the provisions of the Scheme. Specifically, the eligibility criteria and universal actions, in order that farmers can avail of the maximum funding attainable under the Scheme.

The Scheme replaces the Basic Payment Scheme (the “BPS”) and Rural Development Programme (the “RDP”), which will be phased out completely by 2029. The Scheme aims to remunerate farmers for actions resulting in environmentally friendly farming that goes above and beyond the minimum legal requirements. Some examples of this include, producing food in a sustainable manner, mitigating climate change, enhancing the resilience of ecosystems in the countryside and cultural resources.

From 2026 onwards, the Scheme will be the primary mechanism to financially support farmers and their land management. From now up until 2026, the Government are implementing a transition period in which the BPS and RDP will run concurrently, up until the SFS is formally introduced. During this transition period, farmers can apply to either one of these schemes but not both. Notably, farmers can recover an additional one-off payment of £1,000.00 for smaller farms in the first year to acknowledge the uncertain transition period.

When does the Scheme come into force and how to apply?

On 15 July 2025, the Welsh Government formally launched the Scheme. It will commence from the 1 January 2026. We are now in the transition phase and farmers have the choice to enter the Scheme or remain with the BPS. Typically, applications open annually between March to May for farmers to submit an application.

Applications to the Scheme are available via the single application form on the Rural Payments Wales online portal.

Eligibility to the Scheme

To be eligible to apply for the Scheme, you must undertake agricultural activities on agricultural land, have at least 3 hectares (i.e. 7.41 acres) of eligible land in Wales or demonstrate more than 550 standard labour hours. Lastly, farmers must have exclusive occupation and management control of the land for at least 10 months of the calendar year.

Interestingly, the Government intend to remove the previous requirement for farms to have at least 10% of tree cover to qualify for the available funding. Farmers will now be responsible for submitting an opportunity plan for woodland and hedgerow in the first year and demonstrate progress by the end of 2028.

The Universal Actions  

If the above eligibility provisions are satisfied, farmers must carry out a set of mandatory 12 universal actions (the “Actions”).

The Actions include the following:

• Improving soil health;
• Integrated pest management;
• Benchmarking;
• Continuous professional development;
• Habitat maintenance;
• Temporary habitat creation on improved land;
• Designated site management plan;
• Hedgerow management;
• Woodland maintenance;
• Tree and hedgerow planting opportunity plan;
• Historic environment; and
• Animal health and welfare.

Please note that some Actions may not be applicable to all farms and flexibility has been woven into the Scheme to accommodate this.

For further information of the Actions and their benefits, please see the attached link [Sustainable Farming Scheme 2026: scheme description [HTML] | GOV.WALES].

It is important to note that to receive the standard payment under the SFS, farmers must have at least 10% of their land that is actively managed as a habitat for the benefit of wildlife. If farmers do not have sufficient existing habitats to meet this requirement, they must create a new temporary habitat feature to meet the threshold. Farmers are concerned this will impact productivity and their ability to feed the nation.

Optional and Collaborative Actions

Famers also have the flexibility to choose to opt into discretionary Actions known as optional and collaborative actions. If farmers elect to join these schemes, the Government will make additional payments, in line with the delivery of further environmental benefits.

Some of the provisions include woodland creation, public access improvements and extended hedgerows. The collaborative elective scheme is due to be developed over time, but it is clear that the Government intends to support landscape scale activity in which multiple farmers work collaboratively together on shared environmental outcomes.

A new Horizon

This new farming era seeks to balance supporting agriculture and environmental goals. The Scheme seeks to redefine a new relationship between farms and the people of Wales. The Welsh Government maintain that the Scheme is not only a program for farmers but seeks to ignite the whole nation to ensure that nature is restored, water quality improved and that our local countrysides are supported to recover and thrive. Therefore, it is everyone’s duty to do their own part and ensure that the Scheme succeeds in sustaining and strengthening environmentally farming in Wales.

How can Redkite help you?

If you require our help or guidance on any agricultural matters, agricultural land, sales, purchases, refinance or leases, then please get in contact with our leading team of experts here at Redkite Solicitors.

Our friendly team of experts in our Commercial Property and Agricultural Department are here to help and support you at every step of the way.

This article was written by Redkite Solicitors, Evangeline O’Dowd.