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Farmers to be offered retirement carrot in effort to open up agricultural industry
The fallout from Brexit is beginning to filter through to sectors dealing with food production and supply. In recent months, the spotlight has fallen on the fishing industry and the issue of access to fishing waters and quotas. Now, attention is beginning to turn to the agricultural sector as the government seeks to move away from the EU-style basic payments system and replace it with a subsidy-based system.
From 2022, as part of the proposals, lump sums of up to £100,000 will be offered to farmers who are seeking an exit strategy from the industry. Farmers would receive the payments if they lease, sell or donate their land, or surrender a tenancy.
Under the previous EU-style “basic payments” system, subsidies were paid out annually based on land area being farmed. Pending the outcome of a consultation process on the new policy, the payments will be handed over as a single sum instead.
A key driver behind the shift in approach is to encourage the freeing up land for new entrants and the next generations of farming families.
Any farmers who take advantage of the lump sum offer will relinquish their access to annual subsidies. The lump sums would be calculated based on the annual figure farmers would have otherwise received from the EU subsidy scheme before it was tapered and then multiplied by 2.35. It’s anticipated that the average lump sum payment will be slightly more than £50,000 with payments being capped at £100,000.
A further change being floated is to phase out the link between farming activity and payments made in the period from 2024 until 2027 when the current scheme ends. At that point, farmers would switch to an alternative payments system based on environmental work. Payments will no longer be based on land area and those receiving payments will have greater freedom over their business model and objectives, including taking the option to expand, downsize or diversify.