Farmers who wish to leave the industry will be supported by a new government scheme which provides a lump sum payment, allowing them to exit the sector in a managed way.
The scheme follows a public consultation carried out last year where the majority of respondents supported the initiative. It builds on evidence that some farmers would like to retire or leave the industry but have found it difficult to do so for financial reasons.
The scheme is part of reforms set out in the Agricultural Transition Plan which the government said outlines plans for 'a new, fairer system of farming that works in the best interests of farmers now the UK is outside the Common Agricultural Policy'.
Opportunities for new farmers
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 government has also been working with in partnership with industry leaders, local councils and land owners to design a New Entrants scheme to create opportunities for new farmers.
The Lump Sum Exit Scheme is due to open in April 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.
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.
'Direct payments currently made through the Basic Payments Scheme offer poor value for money and are based on how much land a farmer has, which inflates rent and can stand in the way of new entrants. Following the consultation, the government will also progress with plans to separate Direct Payments from the amount of land farmed, from 2024.'
Industry welcomes clarity
NFU vice president Tom Bradshaw said the new scheme offered farmers clarity at a time they are making big decisions about the future of their farms.
“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.
“Farming is a job like no other and deciding to leave the industry will be deeply subjective to each person. I would encourage anyone considering this to take advantage of the free and confidential business advice being funded by Defra.
“Practically, it is good news that Defra and HMRC will treat the lump sum as a capital payment. This will ensure more of the payment is retained by the retiring farmer, which is reflective of the nature of the scheme.
“The NFU will continue to analyse the detail of today’s announcement and how the implementation will work for any interested farmers, but particularly those with more complex situations such as tenant farmers. We will also continue working with Defra on the crucial New Entrants Scheme which we hope will provide a pipeline for new talent to enter the industry.”