Environment Secretary George Eustice announced this week that the scheme would open in April to allow those wanting to step back from farming exit the sector in a “managed way”.
The launch comes after last year’s public consultation which, Mr Eustice said, showed that the majority of respondents supported the initiative, which he added, also built on evidence that some farmers would like to retire or leave the industry but have found it difficult due to financial reasons.
In return for their payment, farmers will surrender their entitlements and be expected to either rent or sell their land and in the case of tenant farmers, surrender their tenancy.
“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,” Mr Eustice said.
“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.”
Tom Bradshaw, NFU vice president, said for farmers thinking of leaving the industry the clarity provided by the Government announcement is “incredibly important”.
“With the rollout of the first domestic agricultural policy for more than 40 years currently taking place, farmers across the country will be making difficult decisions about the future of their farm business.
“Farming is a job like no other and deciding to leave the industry will be deeply subjective to each person. I would encourage anyone considering this to take advantage of the free and confidential business advice being funded by Defra.”
Mr Bradshaw welcomed the news that Defra and HMRC will treat the lump sum as a capital payment saying this will ensure more of the payment is retained by the retiring farmer.
He said the NFU would continue to “analyse” the detail of the scheme and how it will work for interested farmers particularly those with complex situations such as tenant farmers.
The announcement of the scheme has been welcomed by the Tenant Farmers Association (TFA).
“With Lump Sum Exit Payments limited to a maximum of £100,000, the scheme is never going to provide a sufficient amount of money on its own to assist people into retirement.
“However, if combined with other available resources, such as settlements negotiated in the surrender of a tenancy, the sale of live and dead stock and other pension provision, this exit scheme will benefit some farmers,” said TFA chief executive, George Dunn.
Mr Eustice said the Government has also been working with industry leaders, local councils and land owners to design a New Entrants scheme which would create “real opportunities” for new farmers.
A scheme which Mr Bradshaw said the NFU would continue to work with Defra to develop and hoped would provide a “pipeline” for new talent to enter the industry.