The Department for Environment, Food and Rural Affairs (Defra) has announced a new Lump Sum Exit Scheme for farmers who wish to leave the industry.
The scheme follows a public consultation carried out last year where the majority of respondents supported the initiative.
Under the scheme, in return for their payment, farmers will surrender their entitlements and be expected to either rent or sell their land or surrender their tenancy, in order to create opportunities for new entrants and farmers wishing to expand their businesses.
The scheme will open in April (2022) and the application period will run until the end of September.
The payment will be based on the average direct payments made to the farmer for the 2019 to 2021 Basic Payment Scheme years. This reference figure will be capped at £42,500 and multiplied by 2.35 to calculate the lump sum, meaning that farmers could receive up to around £100,000.
Announcing the new scheme, Environment Secretary George Eustice said:
“Those of us who grew up with farming know the emotional connection farmers have with their land and the decision to retire or to exit the industry can be extremely difficult and is frequently postponed.
“The purpose of The Lump Sum Exit Scheme is to assist farmers who want to exit the industry to do so in a planned way and provide them with the means to make a meaningful choice about their future. The Scheme will also free up land for new entrants to farming and those who want to expand their businesses.”
Response to Lump Sum Exit Scheme
The scheme has been welcomed by the Country Land and Business Association (CLA), which call it a positive step towards supporting the next generation of farmers.
“Farmers build a long-standing connection with their land. Stepping aside and leaving the industry can therefore be extremely difficult, with pressure on profits and changing demands on how land is used,” said CLA president Mark Tufnell.
“The government’s announcement today about the new Lump Sum Exit Scheme is therefore welcomed, giving farmers up and the down England an option to leave farming in a planned way with greater financial security.
“It won’t be right for everyone, and we are not expecting high uptake, but it will contribute to opening up opportunities for the next generation and new entrants to take up the reigns.
“This scheme will bring new ideas and innovation to the sector to meet the future challenges for sustainable farming and environmental delivery.”
“For those thinking of leaving the industry, the clarity provided by the government today is incredibly important. Every farming business is unique, with personal circumstances, land tenure and enterprises varying massively, so it’s positive that Defra is understanding of this,” added National Farmers’ Union (NFU) vice-president Tom Bradshaw.
However, the Tenant Farmers’ Association (TFA) believes the amount will not be enough on its own.
“With Lump Sum Exit Payments limited to a maximum of £100,000, the scheme is never going to provide a sufficient amount of money on its own to assist people into retirement,” said TFA chief executive George Dunn.
” However, if combined with other available resources, such as settlements negotiated in the surrender of a tenancy, the sale of live and dead stock and other pension provision, this exit scheme will benefit some farmers.
“It is very disappointing that Defra has not been bolder in its aspiration,” he added.