Government commits to support farmers who wish to leave the industry

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 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.

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 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 our 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.   

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.

Ends.

Notes to editors   

• The Basic Payment Scheme will be replaced by delinked payments in 2024. This means that recipients won’t have to farm the land to receive the payments until they have been phased out by the end of 2027. A farmer may get delinked payments even if they choose to stop farming altogether. Those who continue farming will still have to comply with standards on the environment, plant health, and animal welfare.  
• Replacing the Basic Payment Scheme with delinked payments in 2024 will deliver significant further simplification for both farmers and the Rural Payments Agency. This will free up farmers to focus on running their business and delivering the public goods that can be rewarded under the new environmental land management schemes: the Sustainable Farming Incentive, Local Nature Recovery and Landscape Recovery. 
• As set out in the Agricultural Transition Plan 2021 – 2024, the Government will provide funding to create lasting opportunities for new entrants to access land, infrastructure and support to establish successful and innovative businesses. The details and eligibility criteria of the new entrant scheme are being designed, and a series of pilots will be launched later this year.
• Farmers and land managers are being encouraged to apply for Countryside Stewardship (CS) agreements to reward them for their efforts to protect and improve their natural environment, as the new scheme opens for applications today (8 February). Farmers in Countryside Stewardship will be best placed to enter the new Local Nature Recovery scheme – one of the three new environmental land management schemes, which will be fully introduced by 2024. The Local Nature Recovery scheme will pay for locally-targeted actions which make space for nature in the farmed environment such as creating wildlife habitat, planting trees or restoring peat and wetland areas. Local Nature Recovery scheme will include the best parts of CS, as well as new elements.
• 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. The Government is phasing out Direct Payments in England over a gradual seven year transition period, to move to a fairer system. Delinked payments will separate the payment from the amount of land farmed, from 2024.
• Delinked payments will be based on the average payments made to the farmer for the Basic Payment Scheme years 2020 to 2022. Progressive reductions will be applied to the payments as they are phased out by the end of 2027.  
• The Lump Sum Exit scheme will:  

• require farmers to surrender their English Basic Payment Scheme 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 in England 
• require farmers to 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
• allow farmers to keep their farmhouse, commercial buildings and non-agricultural land

• have more flexible rules for partnerships and limited companies than we had proposed in the consultation 
• base the lump sum payment on the average Direct Payments made to the farmer for the 2019 to 2021 BPS scheme years – which will be capped at £42,500 and multiplied by 2.35 to calculate the lump sum.

• More guidance on the Lump Sum Exit Scheme and delinked payments can be found at www.gov.uk/rpa/lump-sum-exit-scheme
• The application period for the Lump Sum Exit Scheme is expected to run from April to the end of September 2022.
• The government intends to legislate when parliamentary time allows to provide clarity that the Lump Sum Exit Scheme payments are capital in nature and will provide further details in due course.