The Welsh Sustainable Farming Scheme

Launch date and structure for the new scheme:

The scheme will begin on 1 January 2026 in a 3-tier system, the tiers will be:

1. Universal layer and mandatory options.
2. Optional layer for additional income.
3. Collaborative layer for group projects.

Funding and Payment Framework

There will be a choice which claimants will need to make between claiming the new SFS scheme or continue claiming the Basic Payment Scheme (BPS), albeit on a reduced rate.

 

From 2026, BPS will be phased out, BPS is to be completely removed from 2029 onwards.  One of the key concerns with the recent announcements is that the Welsh Government has confirmed its intention to reduce the BPS to 60% of current payment levels in 2026, having previously reassured farmers that there would be no ‘cliff edge’ in funding through the transition to new schemes.

 

According to the NFU, last November, the Welsh Government reiterated that it was still its intention to phase out the BPS during the transition period through an incremental reduction in value (20% per year) starting in 2026, which appears to have been lost. This has been recorded as a “huge blow” for Welsh farmers.

 

Once a claimant moves to SFS, they cannot move back as the entitlements will be cancelled.  However, they can still be transferred with land on the basis that the transferee is still eligible to claim. Something to note if purchasing or taking on land under a Farm Business Tenancy over the coming years.

 

Cross-border farm business must be able to meet the eligibility criteria; Universal Actions and Scheme Requirements on land in Wales. Welsh Government are not able to pay on land outside of Wales and therefore cannot take account of land farmed outside of Wales in any of the Scheme Requirements. This includes the 10% Habitat Scheme Requirement.

 

The rates announced for SFS for 2026 are:

1. Whole Farm Payment

£70/Ha for the first 70 hectares and then £2/Ha above that.

2. Social Value Payment

£107/Ha

Total combination of £177/Ha up to 70 hectares and £109/Ha above that.

 

Additional supplementary payments are:

1. £69/Ha habitat maintenance.
2. £62/Ha woodland maintenance.

CAPPING

All of the above is subject to capping – however the capping ceiling for universal payments is £25,000.

 

Annual rates for 2027 onwards will be a decision made on a year-on-year basis by the Welsh Government.  Therefore now, the payments above are for 2026 only.

 

BPS rates currently are £232/Ha for the first 54 hectares and £121/Ha thereafter.  The 2026 rates are proposed at £139/Ha for the first 54 hectares and then £73/Ha thereafter.

 

In addition to this, a one-off payment of £1,000 is being offered in 2026 only, to those farms under 100 hectares (247 acres) who opt to move from the Basic Payment to the Sustainable Farming Scheme.

MANDATORY UNIVERSAL ACTIONS

Seen as an area payment scheme, the SFS will have certain conditions which must be met in order to be eligible, these are as follows:

1. The statutory management requirements.
2. The present GAECs, but without GAEC 1, 4 and 5.
3. The new universal code, which is still being drafted.
4. The 12 universal actions.

 

The much talked about reports of woodland/tree cover requirement has not been proposed, however within the scheme rules there is a  requirement to have 10% habitat – this will be based on the amount of existing semi natural habitat (excluding Common Land) including all existing semi natural habitat as defined under UA5, established broadleaved woodland, hedges in good condition and habitats established since 2022 such as streamside corridors, ponds, woodland and hedges. Farms with insufficient habitat must create additional temporary habitat to achieve 10% (UA6).

OPTIONAL AND COLLABORATIVE LAYERS

If any claimants wish to go over and above the mandatory level, they can, on the basis they meet the requirements they will then received a further layer of payment.

WHAT HAPPENS NEXT

There will be full technical guidance released in 2025 which will detail the criteria, actions and any evidence requirements and how payments will work over the claiming year.

The application windows (in line with former BPS dates) will be mid-March to 15 May every year via the Rural Payments Wales online system.

POTENTITAL PROBLEMS

Historically, BPS claimants needed to have management control of their land.  It would appear that the “management control” requirements does raise a problem for anyone with tenancy changes in 2026.

 

The first issue is where any rented land is not held for a full 10 months, it cannot be eligible under the new proposed scheme.  Therefore, anyone looking to take up new land from Lady Day (25 March 2026), or with a tenancy which might end in 29^th September 2026 might find it more preferable to stay within the BPS for the 2026 year.

 

Also anyone who starts farming at any point within a calendar year, may not have access to the new scheme until their first full calendar year starts and they therefore, miss out on the first 2026 claiming year.