Farmers seeking to retire from the industry will soon be able to apply for funds to help them leave, with the potential to receive up to £100,000.
The lump sum exit scheme is due to open in April and the application period will run until the end of September, Defra has announced today.
The payment will be based on the average direct payments made to the farmer for the 2019 to 2021 Basic Payment Scheme (BPS) years.
This reference figure will be capped at £42,500 and multiplied by 2.35 to calculate the lump sum, Defra says, meaning that farmers could receive up to £100,000.
In return for their exit payment, farmers will surrender their entitlements and be expected to either rent or sell their land or surrender their tenancy.
This will be in order to create opportunities for new entrants and farmers wishing to expand their businesses, Defra explains.
The government says it has been working with industry leaders and landowners to design a new entrants scheme to create further opportunities.
The exit 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 UK's post-Brexit agricultural transition plan, which outlines plans for a new system of support with an emphasis on the environment and 'public goods'.
Defra Secretary George Eustice said the lump sum exit scheme would assist farmers who want to exit the industry to do so in a planned way.
“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 scheme will also free up land for new entrants to farming and those who want to expand their businesses.”
The government says it intends to introduce new legislation to provide clarity that the exit scheme payments are capital in nature, adding that it will provide further details in due course.
What is the lump sum exit scheme?
The government has today announced new information of its new lump sum exit scheme, including:
• Farmers will surrender their BPS entitlements before they receive the lump sum payment – and, once they have received the lump sum, they won’t be able to claim further direct payments
• Farmers will transfer out their agricultural land in England - but they are allowed to keep up to 5 hectares and any agricultural land they plant with tress under certain woodland creation schemes
• It will allow farmers to keep their farmhouse, commercial buildings and non-agricultural land
• The scheme will have more flexible rules for partnerships and limited companies than was proposed in Defra's consultation
• The lump sum payment will be based on the average direct payments made to the farmer for the 2019 to 2021 BPS scheme years– capped at £42,500 and multiplied by 2.35 to calculate the sum
