Government announces Lump Sum Exit Scheme for farmers wishing to leave industry

Farmers in England wishing to leave the industry will be supported by a new government scheme, which will provide a lump sum payment allowing them to exit the sector in a managed way.

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 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.

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The scheme is part of reforms set out in the Agricultural Transition Plan, which outlines plans for a new, fairer system of farming that works in the best interests of farmers now we are outside the Common Agricultural Policy, representing the biggest changes to farming and land management in 50 years.

The government has also been working in partnership with industry leaders, local councils and land owners to design a New Entrants scheme to create real 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.

Over the past year, the government has announced a number of schemes which will support farmers to boost food production, alongside payments for actions which benefit the environment.

Defra is working in partnership with farmers to design the new schemes and support the choices that they make for their own holdings.

More than 3,000 farmers across the sector are testing and trialling the new approach.

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.

Responding to the announcement from the government about the Lump Sum Exit Scheme, NFU vice president, Tom Bradshaw, said: “With the rollout of the first domestic agricultural policy for more than 40 years currently taking place, farmers across the country will be making difficult decisions about the future of their farm business.

“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,” he concluded.