At first glance, it sounds like a generous offer. The government wants to pay farmers to retire – so we can leave the industry with dignity while paving the way for new entrants to agriculture.
How much would we receive for leaving? A Defra consultation launched earlier this year suggests 2.35 times our annual basic payment up to a maximum £100,000. Other perks were suggested too.
The overall package could include a surrender payment from a landlord for a secure tenancy, income from the sale of machinery and any associated pensions – a useful start to any retirement plan.
But everything is not as it seems. A tenant farmer in a tied house would be hard-pushed to buy a new home for £100,000. And when the average basic payment is little more than £23,000, most farms will not receive anywhere near the that figure.
Add in the cost of any tax bill plus any mortgages and debts accrued over the farming life and the final amount will be diminished further still. And I can’t see many landlords making a surrender payment to take back a secured tenancy.
So what can tenant farmers do? Can they take the payment, stay in the farmhouse and then sub-let or rent out the land. Unlikely. Owner occupiers have also raised many questions about the retirement scheme.
I assume you can just rent out the land to a neighbour or share/contract farm. But how does it work if the farm is in the name of a limited company or partnership? What if father and son or daughter farm together in joint names?
Can the father take the retirement package and rent the land out to the next generation? Perhaps a change of business name will be required. Perhaps a new company to rent the land. Yet the stated idea of the scheme is to attract new farming entrants.
I can see some farmers taking the money, staying put and renting out their farm to existing farmers – their own family, near neighbours or other farming corporations. A 65-year-old farmer renting out their land to his 60-year-old neighbour.
To encourage “generational change” and new faces into the farming world, it is clear in my mind that much-needed money should go to new farmers – or at least match the money spent by the government on these retirement packages.
Such policies already exist in other European countries. But we have been slow off the mark here in the UK. That is one of the reasons that the average British farmer is almost 60-years-old and not any younger.
Defra minister George Eustice thinks that younger farmers are better innovators and youth brings more energy. I agree. But without family backing or a lump sum of money, younger farmers will find it tough to break into farming.
Change is coming
So the scheme is well intended but flawed. Change in farming is certain over the next few years. But it appears it will change with the same old faces. A case of musical chairs rather than a changing of the guard.
The large farms will get bigger – boosted by low interest rates and the inability of smaller farms to adapt or survive. The large debts accrued by some farming companies will continue to rise – but be of little concern to their shareholders.
For the rest of us, it is going to be a tough few years ahead. Struggling to get by while the basic payment is phased out and a new system of farm support is phased in. Let’s hope we all can knuckle down and survive the changes.