Environment secretary Emma Reynolds outlined a "simpler and fairer" Sustainable Farming Incentive (SFI), which rewards farmers for nature-friendly agricultural practices and habitat creation.

The SFI is a key part of the environmental land management (ELM) schemes being introduced in place of EU-era subsidies - but farmers were furious when it closed abruptly last year after the budgeted money had all been spent.

Speaking at the National Farmers’ Union (NFU) conference in Birmingham, the Defra minister said the reformed scheme will open in June for small farms up to 50 hectares and those without an existing nature-friendly farming agreement, with all farms able to access it in September.

Agreements will be capped at £100,000 to "make the scheme fairer" by preventing the largest farms claiming too much of the available money - with a quarter of the funding previously going to just 4pc of farms.

The number of options included in the scheme will be slimmed down from 102 to 71 - "weeding out those that were duplicative or weren't delivering enough for food production or the environment".

"I want to be clear on why we are making this change," said Ms Reynolds. "Some rates were set too high and too much of our most productive land was removed from conventional farming.

"Payments will still be fair and based on income foregone, but they'll support food production, not undermine it.

"Clear budgets will be set for each window, and we will regularly update you on committed spend. There will be no more sudden, unexpected closures."

NFU president Tom Bradshaw said the reformed SFI scheme “appears to strike the right balance between simplifying the process and maintaining flexibility”.

Charles Hesketh, regional policy manager for the National Farmers' Union (NFU) in the East of England (Image: NFU)

Charles Hesketh, regional policy manager for the NFU in the East of England, added: "Overall, I think it's positive that we now have clarity.

"I think it is fair to say we've had a real vacuum over the last year, with no SFI offer and very few grants available. So this is some welcome news, I think.

"The cap seems fairly high, which is pleasing as the minister said 97pc of people [current agreement holders] are going to fall within that cap. So that should mean the majority of our members are able to access a decent pot of money.

"Obviously we've got to have a look through each and every option to see what the revisions look like in practice. But I think the simplification side of things, reducing the number of actions which were very similar so it's not duplication, sounds sensible."

Norfolk farmer Gavin Lane is the national president of the Country Land and Business Association (CLA) (Image: CLA)

Country Land and Business Association (CLA) president Gavin Lane, who farms in west Norfolk, said: “We are pleased Defra has listened to the CLA and industry to adapt the SFI scheme, increasing some payment rates and maintaining 71 actions, with a good spread to allow choice and flexibility for businesses.

“But introducing a cap on payments has risks, limiting the ambitions of those that can do the most for nature. This is counterproductive when the government has legally binding environmental targets and some may have no choice but to intensify production.

“Many farm businesses are facing some of the bleakest profitability conditions in a generation. The Basic Payment Scheme [which previously distributed EU-era subsidies] is virtually gone and SFI is an essential income stream to build business resilience and support food production."

During her conference speech, Ms Reynolds also unveiled a £345m funding package, from the existing farming budget, to support innovation, resilience and environmental targets.

The minister said up to £225m will be available when the next round of ELM capital grants opens in July - up 50pc from last year - to help farmers invest in infrastructure such as hedgerows, natural flood management measures and livestock equipment to help improve water quality.

And she confirmed £120m in productivity grants for 2026, starting with £50m for the Farming Equipment and Technology Fund, which will open in March, and £70m for the Farming Innovation Programme, helping farmers "turn cutting edge research into practical tools that boost productivity growth and resilience".

The minister said the announcements were part of a “determined effort to give British farming the foundation it needs to grow”.

She told farmers at the conference: “We want farm businesses that are productive, profitable and resilient.

“We want to see more British food on more tables here at home and around the world, and we want a countryside that is thriving, for wildlife, for communities and for the families who have worked this land for generations.”

The announcements come as the government seeks to reset its relationship with the agricultural sector after a partial climbdown on inheritance tax levied on farm businesses and last year's sudden closure of the SFI.

Ms Reynolds acknowledged that for many farmers “uncertainty in recent years has been damaging not just financially, but in terms of trust”.

NFU president Tom Bradshaw welcomed the investment announcements, but urged the government to back more homegrown food after years of declining productivity.

He called on ministers to support farmers with high energy costs coming in April – which he warned would lead to price hikes on shop shelves – and invest in managing rivers and water to make the food system “resilient”.

Mr Bradshaw also warned that access to agricultural technology such as gene editing and pesticides is in “real jeopardy” as the UK seeks a closer trade relationship with the EU.

© Eastern Daily Press