Welsh Government unveils landmark farm subsidy scheme

Emily Price

The Welsh Government has unveiled the final version of its landmark subsidy scheme for farmers.

The Sustainable Farming Scheme (SFS) will be the primary mechanism through which farm businesses in Wales will be able to apply for farm support from 2026 onwards.

The major changes revealed on Tuesday (July 15) will replace the Basic Payment Scheme (BPS) which will be phased out over the coming years.

The new financial support for farmers marks a significant policy shift in the way land management for public goods is supported in Wales.

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Climate change

After seven years in the making, the new approach focuses on sustainable food production that responds to the climate and nature emergency.

The controversial scheme sparked protests from farmers last year over its targets for tree cover and the methodology of payments.

Since then Welsh ministers have U-turned on the requirement for farmers to have 10% tree cover on their land in order to qualify for the subsidy.

The Welsh Government says the new policy has been made less complex with fewer administrative requirements.

Deputy First Minister with responsibility for Climate Change and Rural Affairs, Huw Irranca-Davies said: "This represents a landmark moment for Welsh agriculture, with farmers playing a central role in our food security, environmental protection, and maintaining the distinct cultural heritage and language of rural Wales.

"Our ambition is to see a thriving and confident agriculture industry in Wales, that is built around innovation and growth, to rise to the challenges we face and make most of the opportunities available.

"We hope the majority of farmers join the Scheme to help us realise this ambition. We firmly believe it will provide much needed stability whilst helping farm businesses to be more resilient, productive and sustainable."

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'Generational milestone'

The Farmers' Union of Wales (FUW) described the final version of the SFS as "a generational milestone for Welsh agriculture".

FUW President Ian Rickman said: "During the past year alone, we have attended in excess of 60 meetings with the Welsh Government totalling over 300 hours of negotiations.

"I can assure FUW members and the wider agricultural community that we have left no stone unturned over the past seven years in our ambition to secure a viable post-Brexit farm support framework."

The SFS will begin on 1 January 2026 with the application form for the universal layer of the scheme available via Rural Payments Wales from March through to 15 May each year.

An annual universal payment will go to farmers joining the scheme who follow the requirements including a set of universal actions.

Cut

Many of the actions will be familiar to farmers in Wales, whether beef, dairy, arable, upland, lowland, extensive or intensive.

The number of these actions has been cut and built on the processes and systems of Rural Payments Wales.

All farmers entering the scheme will need to complete an opportunity plan for woodland and hedgerow creation in the first year of entry.

They will need to demonstrate progress towards their plan by the end of the 2028 scheme year.

Generous support will be provided for tree and hedgerow planting in the optional layer of the scheme, including for agroforestry, and there will be a higher payment rate for tree planting during the first 3 years of the scheme.

Farmers are not expected to plant trees on their most productive land – they will decide where to plant, with guidance to ensure the right tree in the right place.

Farmers in the scheme will need to have at least 10% of their land actively managed as habitat.

A range of temporary habitat options are available to choose from if farmers need to do more to meet the 10% requirement.

'Welcome shift'

The woodland trust in Wales - Coed Cadw - says payments for areas of maintained woodland and natural habitats are a welcome shift from previous schemes.

Director Kylie Jones Mattock said: "Integrated approaches such as hedgerows, in-field trees, agroforestry, and woodland grazing have the potential to deliver a wide range of benefits without removing land from food production.

"These measures can improve soil health, boost biodiversity, provide shelter and shade for livestock, and help protect against the impacts of increasingly extreme weather."

The Nature Friendly Farming Network Limited broadly welcomed the SFS but raised concerns that ministers are yet to set out details of the more ambitious optional and collaborative layers of the scheme.

Cymru manager Rhys Evans said: "If we are serious about tackling nature’s decline in Wales, these layers must be ambitious and properly funded.

"Supporting existing good practice in the sector is just as important as helping farmers transition to nature-friendly ways of working."

The Welsh Government has committed the equivalent of this year’s BPS budget to the universal payments in 2026 (£238m for 2026 Universal and BPS payments) to provide financial stability to farmers and an incentive to join the SFS.

Minister say a "significant budget" will be provided for optional and collaborative actions, building on the preparatory phase schemes available this year.