Stacking options for SFI 2026: Beef and lamb

Updated 20 July 2026

What is the economic impact of the Sustainable Farming Incentive (SFI) on farm businesses? We calculate the likely effect on beef and lamb farm profit levels of stacking SFI actions over a three-year period. 

We have also examined the impact of stacking on two other sectors:

• Arable stacking analysis
• Dairy stacking analysis

• The SFI alone is not going to be enough to mitigate the loss of direct payments – this is an intentional feature of the scheme. But the right combination of actions could make up a considerable amount of the shortfall
• Taking part in the SFI can provide extra income for beef and sheep farm businesses
• If farmers select SFI actions that are right for their farm, they can considerably boost the net profit level
• The farm’s net profit will benefit more if SFI actions requiring land are carried out on less productive or unproductive areas of grassland
• It is likely that actions carried out on unproductive grassland will regenerate the land and make it more productive in the long term
• Farmers have the opportunity to maximise the potential of every hectare of land on their farm
• Looking ahead, the SFI can play a role in stabilising farm business incomes

We used two AHDB virtual beef and sheep farms in this analysis:

• 150 ha beef and sheep farm, South West 
• 220 ha mixed farm, Yorkshire and the Humber 

In this analysis, it has been assumed that the 150 ha beef and sheep farm and 220 ha mixed farm had no other active agri-environment agreements in place when they applied for SFI26. The farms previously had Countryside Stewardship agreements but these had expired. Farms which have existing agri-environment agreements cannot select equivalent SFI actions on the same area of land as this is considered as double-funding.

Table 1 shows which SFI actions were included along with payment rate and the area of the farm selected for each action.

Table 1. SFI actions with payment rates and area of land in 150 ha beef and sheep farm

SDA: Severely disadvantaged area

Source: Defra, AHDB

Figure 1 shows that the net profit (total revenue minus total costs) of the 150 ha beef and sheep farm increases by 45% in year 1, 59% in year 2 and 60% in year 3.

Figure 1. Effect on 150 ha beef and sheep farm’s net profit level 

Source: AHDB

The percentage changes shown in Figure 1 are based on the farm having a gross profit level of £126,584 (£844/ha). If the 150 ha beef and sheep farm had a gross profit level of £112,284 (£749/ha), the percentage changes in years 1, 2 and 3 would be 97%, 125% and 131% respectively.

Figure 2 shows the income that would be received by AHDB’s 150 ha beef and sheep virtual farm from taking part in SFI26.

Figure 2. Three-year projection of income received by a 150 ha beef and sheep farm from direct payments and SFI actions

Source: AHDB

Breakdown of SFI payments for 150 ha beef and sheep farm

As a result of taking part in SFI26, the farm receives an extra £14,600 on average per year over the three-year duration of the SFI agreement. The total income received over the duration of the agreement is £43,900.

Table 2 shows the SFI actions selected for the mixed farm along with payment rates and areas.

Table 2. SFI actions with payment rates and area of land in 220 ha mixed farm

SDA: Severely disadvantaged area

Source: Defra, AHDB

Figure 3 shows that the net profit of the 220 ha mixed farm increased by 178% in year 1, 216% in year 2 and 230% in year 3.

Figure 3. Effect on 220 ha mixed farm’s net profit level

Figure 4 shows the income that would be received by AHDB’s 220 ha mixed virtual farm after participating in SFI26.

Figure 4. Three-year projection of income received by 220 ha mixed farm from direct payments and SFI actions

Breakdown of SFI payments for 220 ha mixed farm

As a result of taking part in SFI26, the farm receives £20,200 on average per year over the three-year duration of the SFI agreement. The total income received over the duration of the agreement is £60,600.

In this analysis, the 150 ha beef and sheep virtual farm benefited from taking part in SFI26 to the tune of £14,600 per year in additional income for three years. In total, the farm received £43,900 from SFI26. The 220 ha mixed farm was £20,200 better off on average per year (£60,600 in total).

The 150 ha beef and sheep farm and the 220 ha mixed farm received £33,800 and £51,300 respectively from direct payments before phased reduction began in 2021. Net income from SFI26 does not replace the income both farms received from direct payments but makes an important contribution to make up the shortfall. Farmers will need to explore a variety of options to make up this loss of income.

Land requiring actions on grassland are best done on the less productive areas as this minimises the opportunity cost (income foregone) associated with the loss of grazing potential.    

It is also worth considering what motivates you as a farmer. Some actions may not give a good financial return straightaway but may provide benefits in future if it increases the productivity of your grassland.

Each farm is different – careful planning and selection will help businesses to maximise their economic and environmental potential from the SFI. From the economic perspective, our SFI cost benefit tool allows farmers to examine the net benefit of actions for their own farms, including assessing the opportunity cost involved.

The SFI is not designed to mitigate the loss of direct payments, but it is a source of stabilisation for farm business incomes and will have a greater impact for farms with relatively lower profitability and in years when there are unfavourable market and/or weather conditions

It is in farmers’ interest to investigate which options work for their farm to make the best-informed decision about their business.