“The Government’s Lump Sum Exit Scheme is due to open in April, with the application period running until the end of September. The payment is based on the average payments made to the farmer between the 2019 to 2021 Basic Payment Scheme years.
Whilst the government payments could offer up to £100,000 for farmers, we expect the appeal of the lump sum exit scheme to be quite limited and cannot see scope for a large exodus from farming. The payment itself will not be sufficient in many cases to entice farmers to leave the industry, particularly as retirement from farming can be a very difficult decision to take for many reasons. The nature of farming means there are so many considerations to make upon exiting the industry. A farm is not just a workplace, it is intrinsically a home which will often have been in the same family for generations and there are individual business structures to negotiate as well as family ties, so it is most certainly an emotional decision as well as a financial one. Some decisions will need to be agreed upon by several family members who are multi-generational, all with different priorities that need to align, and currently, the sum of money on offer from Defra is not large enough to outweigh these other factors.
However, the scheme may appeal to those who already had succession planning in mind and for whom the lump sum scheme is well-timed to give them the nudge they needed. The scheme allows a farmer to transfer their land to a successor, and early signs show this may be a popular mechanism by which farmers will pass on the reins to the next generation. This indicates that parents may use the opportunity to allow their children to take on the business while potentially remaining in the farmhouse, taking a softer exit route.
It is unfortunate that Defra have not aligned this announcement with the New Entrants Support scheme. If it had, then multi-generational farming businesses could have really looked at this in the round and used the two schemes to their advantage.
Farm businesses will have two years from when the lump sum scheme opens, until 31 May 2024, to complete their exit. Time will tell whether it will have Defra’s desired effect of shaking up the industry.”
For further information or advice on the Lump Sum Exit Scheme, contact the Cheffins Rural Professionals team on 01223 213777 or camb.agric@cheffins.co.uk or 01353 662405 or ely.agric@cheffins.co.uk for Ely-based clients.