Welsh Sustainable Farming Scheme: All you need to know

A year later than expected, the stage is now set for a 2026 launch of the Sustainable Farming Scheme (SFS) in Wales.

Beset by delays and a not insubstantial measure of controversy, the scheme had in its original guise provoked the very real threat of a mass boycott by farmers.

As a result, the government duly went back to the drawing board under the instruction of a new rural affairs minister “in listening mode”.

See also: Welsh government releases £14m for SFS preparatory schemes

Changes

Huw Irranca-Davies spearheaded a series of key changes and the new outline of the scheme was published in November 2024.

The question is: has it struck the required balance to sit well with farmers, environmental and wildlife groups, and taxpayers?

There is certainly a will for that as Wales is lagging well behind England in getting its scheme off the ground.

Impact of delay

That delay has put the brakes on the ability of farmers to make future plans for their businesses, says Kath Whitrow, agricultural business consultant at Brown&Co.

“It is very difficult to plan when you don’t know what you are planning for,” she reasons.

“You can’t change a farming system overnight. Take the example of beef farming – it takes four years for a suckler calf to become a productive animal.

“Farmers need security and stability, and to have a plan in place if they are to be resilient going forward.”

Payment rates

While the finer detail of the scheme has been published, what is absent is any clue on payment rates.

This is problematic, adds Kath, who has many years of experience working in the agricultural banking sector and is herself a working farmer.

“There are a lot of management decisions in any business that are based around financial circumstances, farmers need that detail.

“Farmers haven’t seen the Basic Payment Scheme [BPS] rate rise to take inflation into account since 2012 – they need a guarantee that this will be addressed in the new payment rates.”

Scheme detail

The scheme itself consists of three tiers:

• Universal
• Optional
• Collaborative.

Universal

There is a long list of actions that every farmer signing up to the scheme must agree to, but it is shorter than it had been.

At 12 actions, it is five fewer than initially proposed; some have been ditched entirely, others merged into one or reassigned into the optional tier.

To qualify for an entry-level payment, farmers must adhere to these.

Challenges

One of the more challenging, perhaps, is to manage 10% of their land as habitat for wildlife.

If their farms don’t have that requisite level already, they will be allowed to create temporary habitat – crop margins, for example.

Establishing wildlife cover crops on improved land will be permitted, as will rough fixed or rotational grass margins on arable land, and planting multispecies or herbal leys on improved land.

These can form part of an ongoing crop rotation and scattered around the farm.

Some might see this as the more onerous of the universal actions.

Until farmers are clear on what the payment rates and management requirements are, Kath says it’s difficult for individual farms to make an assessment on the impacts of creating temporary habitat.

This habitat, from lowland and coastal health and wood pasture to upland open habitats and lowland and coastal health, will need to be managed if farmers want to receive SFS cash.

Some of the other measures in the universal layer could be a good fit with practices that are already happening on many farms.

Health and safety learning

This includes benchmarking, soil testing and keeping detailed records of why and when plant protection products are used.

Every scheme participant will need to complete at least six hours of learning and gain knowledge of some element of health and safety learning.

Hedges

On a practical level, farmers who join the SFS should expect to increase the size and density of their hedges.

Annual cutting of the same stretches year in year out will be forbidden, except along roadsides or around utilities.

SSSIs

After pressure from the farming unions and farmers, sites of special scientific interest (SSSIs) are now eligible for the habitat maintenance element of the universal baseline payment.

This is important as there are some 1,070 SSSIs in Wales, many of which are located on farms, and these were initially excluded.

In a change of heart, the government says it will support payments for the enhancement of these designated sites. Common land has been included, too.

Common land

Initially, because of the complexities of common land ownership and allocation of rights, the government said it could not pay graziers for many of the actions set out in the universal tier.

This has now changed.

A proportion of the universal baseline payment can now be paid to participants with livestock and who hold common land grazing rights.

If the scheme goes ahead as outlined, payment will be allocated in a similar way to how it is now done through the BPS.

Kath grazes sheep common land on the western section of the Great Forest in Powys.

She says common land is an integral part of many hill farming systems. and had always been treated for support payments as part of the farm.

“It is good to see that has now been acknowledged, as a change could have put not only these farms at considerable risk but also the grazing regimes their livestock deliver for nature would also have been in jeopardy,” she says.

“Grazing livestock are an integral part of management of our habitats, and long may that continue.”

In line with the government’s targets for reducing emissions, it expects farmers to adopt animal health and welfare measures to improve productivity in return for the baseline payment.

“Social value” payment

What the government is still working on is a “social value” payment for every farmer who joins the scheme, to “reflect the benefits” farmers provide for wider society by producing food in a sustainable way.

This will be in addition to any costs incurred and income foregone, but there is as yet little detail on this.

Tree targets

A huge barrier to the initial scheme outline making any progress was the requirement for every farmer to have 10% of their land covered in trees.

It was the single most contentious condition of entry.

Had the government not dropped it, it seemed very likely that the number of farmers signing up would have fallen far short of what the government needed to make a success of the scheme.

But trees are still very much on the government’s mind because its ambition is to plant 43,000ha of new woodland by 2030 and 180,000ha by 2050.

It sees farms as an important resource to help it achieve that.

As an alternative to the prescriptive 10%, it has now come up with a requirement in the universal tier for every farm to have what it calls a “tree planting and hedgerow creation opportunity plan”.

In that plan, farmers will need to identify where their farms would benefit from additional trees and hedgerows, and to make progress on that by 2030.

There are choices outlined in the optional tier to facilitate that, money for planting woodland, shelterbelts, agroforestry, orchards, individual trees and new hedgerows.

To the relief of farmers who have recently planted trees, if the scheme outline goes ahead as planned those areas can be included when payments are calculated.

There is also an expectation for farmers to maintain existing woodlands.

Optional – no detail

For farmers who want to bump up their payments there are a series of targeted actions under this tier.

There has been no detail on these in the new outline.

In the previous model, the government said these would include actions on productivity, sustainable farm practice and habitat restoration while extending support through small grants.

Nothing seems to have changed on this.

These might be mob-grazing, covering slurry stores, drying poultry manure and growing crops that reduce a farm’s reliance on bought-in feed.

Farmers could also be paid for having a 3m-wide fence and hedge along the farm boundary.

This would be for preventing contact with neighbouring stock and for committing to isolate all incoming animals for at least six days.

Collaborative

The collaborative actions are targeted at groups of farmers working together to deliver “public goods” at a landscape, catchment or national scale – for instance, improving water quality.

Common land grazing makes another appearance in this tier.

The government intends to pay more to graziers who are part of a grazing association and who carry out co-ordinated grazing actions that are good for wildlife.

TimelineFresh analysis on the impacts of the updated scheme is now under way.

Final detail timeline

The details of the final scheme will be published in summer 2025 before it starts on 1 January 2026.

From that date, farmers will have a choice of receiving either SFS payments or the BPS payment until 2029, before the BPS is removed entirely after 31 December 2029.

From 2026, BPS payments will reduce incrementally by 20% annually.

Once farmers have chosen to participate in SFS they won’t be allowed to revert back to the BPS.

Transition Farmer: Irwel Jones

Irwel Jones © Richard Stanton

Farm facts

Aberbranddu, Llanwrda, Carmarthenshire

• Size: 375ha (255ha owned and 120ha rented)
• Rainfall: 2,000mm
• Soil: Clay soils and peaty on marshy areas

Sheep farmer Irwel Jones needs clarity on payment rates for the actions listed in the latest update of the Sustainable Farming Scheme (SFS).

Without that, it is impossible to work out how the scheme might stack up financially for his upland farming business at Llanwrda, he says.

“There is still no financial detail, and the government just seems to have watered down the original scheme a little bit so we will end up with a scheme where no one is really happy, plus less money.”

The upland lamb producer considers himself to be a farmer “first and foremost” but is proactive on environmental measures, from supporting biodiversity to reducing carbon emissions.

“I have always tried to be positive on the environmental side of things, to strike a balance between farming and nature and to make the most of the grant schemes – for example, hedge laying,” he explains.

The delay to the rollout of the SFS has curtailed his plans for Aberbranddu.

“Everything in the SFS seems to be about going above and beyond what a farmer has done before, so it could put us at a disadvantage if we pressed ahead with further environmental work before the scheme goes live,” Irwel suggests.

There are 160 acres of mature woodland at Aberbranddu which, under the business’s previous Glastir agreement, it was paid to maintain.

“If we had been proactive and planted more trees, we might have to find more to do in the new scheme,” says Irwel.

He is, however, in the process of applying to the Small Grants scheme to create a 200m stretch of hedge.

His future plans include planting a lot of his rough ground with trees and to create a pond for livestock but which would be beneficial for nature too, a “win-win for both”, he says.

The guarantee of the full Basic Payment Scheme until 2025 has been “a lot of help”, he acknowledges, but adds: “At the end of the day we want to look forward, not back.”

Case study: Martin Griffiths

Martin Griffiths © Debbie James

Farm facts

Ffosygravel Uchaf, Borth, Ceredigion

• 192 Holstein and Friesian dairy cows
• 1.3m litres annual milk production
• 4.49% annual rolling butterfats average and 3.46% protein
• Milk sold to South Caernarfon Creameries 

Excluding mature hedgerows from the obligatory 10% habitat cover requirement will make it very difficult for dairy farmer Martin Griffiths to enter the scheme.

Martin farms with his brother, Hugh, mother, Margaret, and nephew, Jac.

He says the family was initially optimistic when details of the new outline were announced but “relief quickly turned to disappointment”.

They realised that they could not count established hedgerows in their habitat cover, although this has yet to be confirmed by the Welsh government.

He says it “makes no sense” to omit these but to include newly established hedges.

“No one could possibly suggest that tiny saplings, a row of twigs, can provide habitat and that a mature hedge cannot.”

As the Griffiths farm a coastal holding in Ceredigion, much of the land is devoid of trees.

– of the 100ha that the family farms, there is only 1.2ha of tree canopy and 0.2ha of established habitat.

They had calculated that had they been able to include mature hedges, the farm would fall well within the 10% threshold.

Martin worries that the options the government has set out for including temporary habitat are largely aimed at arable farmers, not milk producers like him.

Although growing multispecies leys is among the options, he is not convinced they will be as productive as his existing grassland leys, some of which are 30 years old.

Multispecies swards “definitely have a role to play”, Martin reckons, but is “less convinced” they will perform on his farm and deliver from an economic point of view.

“Reseeding to incorporate these will add a lot of cost to the system – the cost of the seed, lime, fertiliser and the downtime of having those fields out of action every four years or so, and then I don’t know if we will get consistent yields.”

Martin welcomes the removal of the 10% tree cover requirement though, arguing that had this been forced through and applied to coastal farms like his.

He says the trees wouldn’t survive, let alone thrive as a salve for climate change.

He, like the majority of Welsh farmers, now anxiously awaits the new payment rates before making a decision on how to move forward.