Environmental scheme closure adds to cashflow concerns for farmers
By Robert Blair, Partner and ARA specialist
The recent decision to close the Sustainable Farming Incentive (SFI) scheme to new applications has left many in the agricultural sector frustrated and uncertain.
The closure, announced with little warning, comes just as Basic Payment Scheme (BPS) reductions are beginning to bite, with payments down by as much as 76 per cent.
Farmers who had hoped to enter environmental schemes this year have suddenly found themselves cut off from a key source of income.
While existing agreements will be honoured and pending applications will still be considered (provided they meet the criteria), no new applications will be accepted until summer 2025 at the earliest, with a new scheme expected in 2026.
The timing has been widely criticised, particularly following the National Farmers’ Union (NFU) conference, which announced new grants and environmental actions.
There is growing concern that the Government is making changes to farm support without proper consultation or understanding of the on-the-ground impact.
Upland farmers left in the cold
Nowhere is the effect of this policy shift being felt more keenly than among upland and hill farmers. Speaking at Prime Minister’s Questions on 2 April, Liberal Democrat Rural Affairs Spokesperson Tim Farron highlighted the “poverty and uncertainty” many upland farmers are facing – with average earnings falling well below the national minimum wage.
Despite a personal connection to the Lake District, Prime Minister Sir Keir Starmer declined to meet with farmers directly, referring the issue to a Minister.
This, coupled with concerns raised by former Defra Minister Rory Stewart, who noted that half of upland farmers were unable to enter the SFI before its closure, has only heightened fears that the unique needs of these communities are being overlooked.
For many of these farmers, the loss of BPS and the inability to join new environmental schemes may result in no Government support at all.
Time to reassess your finances?
With farm incomes under pressure and uncertainty around future policy, understanding your business’s financial position is becoming increasingly necessary.
Clear cashflow forecasting and budget planning can support better decision-making and help you prepare for the year ahead. We recommend:
- Reviewing your current income and expenditure
- Updating your financial forecasts in light of reduced support
- Exploring alternative income streams or grants still available
- Speaking with our accountants about contingency planning and funding options
While political solutions may take time, taking steps now can help ensure the long-term future of your farm business.
If you would like help preparing a budget, forecasting cash flow, or simply understanding the impact of these changes on your business, our rural and agricultural specialists are here to support you. Contact us today.