Welsh Government confirms Sustainable Farming Scheme – launching January 2026

Welsh Government yesterday announced its replacement for the Basic Payment Scheme in Wales which is due to commence 1^st Jan 2026. The Sustainable Farming Scheme.

The scheme has been under discussion for several years, with this final iteration recognising some of the areas of difficulty in the previous consultations.

The mandatory tree cover requirement of 10% has been removed; however, there will be a requirement for farms to put in place a plan to increase existing cover and achieve the national aspiration of 17,000 new hectares by 2030.

Common Land, which forms part of the current eligible area is now also included.

There will be a new Social Value Payment which reflects the value farms play in the rural community and economy that is not recognised by a market value.

Existing woodland and hedgerows, along with certain features that were previously ineligible, will also now fall under the scheme for payment.

Whilst the aforementioned are all positive changes to previous consultations, farms that chose not to enter the scheme in January will see a 40% cut in their BPS, a change in the previously proposed transition of 5 years down to 3 years.  An enhanced capping structure will also see payments over £25,000  start to taper down from reductions of 5% to 100% where over £300k.

Farms will be required to undertake and record 12 Universal actions ( where applicable to their systems), including:

• Soil Health Planning
• A farm farm-level carbon Baseline
• Recording of a minimum of 6 KPI’s (e.g. Scanning Rates, Lameness etc)
• Woodland, Habitat, SSSI & Hedgerow Management
• Continuous Professional Development
• Pest Management and Animal Welfare Plans
• Health & Safety
• Tree / Hedgerow Planting Opportunity Plan

70% of the total budget which remains unchanged on current levels despite the industry calling for an increase that reflects inflationary impacts for the last decade, will be allocated to the universal level with the remainder being allocated to preparation for the next phases of the scheme.

Payment rates have been advised as £70/Hectare ( up to 70 hectares - £2 thereafter)

Social Value Payment £107 / Hectare

Habitat Maintenance - £69/ Hectare

Woodland Maintenance £62/ Hectare

Optional layers will be developed in 2026, and beyond which will focus on further enhancements to Soil / Air and Water Quality along with Improved public access and environmental options.  These will attract further payments yet to be determined.

The final addition in 2027 will a Collaborative layer aimed and partnerships working together to enhance R & D, Supply chain and landscape scale actions.

Both these layers will provide an opportunity to access additional funding in return for undertaking further actions, including One off / multi annual payments and capital grants.

The key advice to farmers is to take time to review the scheme proposals and consider operational and financial implications to assess if you should enter the scheme in 2026.

If you would like to discuss the impacts and opportunities, please contact our Agri-Business Consultancy team from the Banbury office: James Brown on 07920 230311, Kath Whitrow on 07775 548605 or Non Thorne on 01295 273555 (Press Option 4).