Farm retirement scheme will launch next month – Defra

• Farmers paid to retire from  farming

• As much as £100,000 could be on offer

• Opportunities for more new entrants

Farmers wanting to leave the industry could be eligible to claim a lump sum payment from a new government scheme.

Due to open in April, the application period for the Lump Sum Exit Scheme will run until the end of September. The payment will be based on the average direct payment 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 total lump sum to be paid to farmers. It means an individual grower or livestock producer could receive up to around £100,000.

The retirement scheme follows a Defra public consultation last year. The consultation was carried out following evidence that some farmers wanted to leave the industry – but couldn’t afford to do so.

How it will work

It is part of the government’s agricultural transition plan, which represents the biggest changes to farming and land management in 50 years. The plan includes the end of the Basic Payment Scheme, which is being phased out by 2028.

In return for their lump sum payment, farmers will surrender their entitlement to receive future basic payments. They will also be expected to either rent or sell their land or surrender their tenancy – creating opportunities for new entrants.

Alongside the retirement scheme, Defra says it has been working in partnership with farm leaders, local councils and land owners to design a new entrants scheme to encourage more first generation farmers into the agricultural industry.

Defra 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.

Meaningful choice

“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 Basic Payment Scheme offered poor value for money, said Mr Eustice. It inflated the rental value of farmland and was a barrier to new entrants – and it was right that it was being   phased out completely.

Future support will be based on environmental payments, with farmers expected to undertake work that improves air, water and soil quality – as well as biodiversity – under the forthcoming Environmental Land Management scheme.

Defra says it is continuing to work with farmers to design the new scheme and support the choices they make for their own holdings. More than 3,000 farmers across the sector are testing and trialling the new approach.

Scheme ‘must be part of wider package’

The Lump Sum Exit Scheme on its own will not provide enough money to help people retire, says the Tenant Farmers Association. But it could benefit some farmers when combined with other available resources.

These could include settlements negotiated on the surrender of a tenancy, the sale of live and dead stock, and other pension provisions, says  TFA chief executive George Dunn (pictured above).

The Lump Sum Exit Scheme is especially attractive to older, owner-occupiers with smaller holdings without available successors. This is because Defra will allow retiring farmers to retain ownership of their land if they rent it out for at least five years.

But Mr Dunn says: “It is very disappointing Defra has not been bolder in its aspiration, by requiring owner occupiers who take part in the Lump Sum Exit Scheme to offer tenancies of at least 10 years or more.”

Other potential beneficiaries are tenant farmers with rights of tenancy succession and who have eligible and suitable successors waiting in the wings. Tenant farmers – with lifetime agreements or without successors – might also be attracted to apply.

“Landlords should not waste this time limited opportunity – there are many who have been extremely keen to obtain the vacant possession of land that may have been held by generations of farm tenants.”