Strutt & Parker has produced a calculator to compare what farmers might expect to receive under Defra’s lump sum exit scheme with the Basic Payments they are projected to receive if they continue to claim throughout the rest of the agricultural transition period (2022-2027).

Defra’s proposal is to pay farmers 2.35 x the average of the BPS payment across 2018-20 (adjusted for subsequent transfers out of entitlements), with the lump sum payable subject to a payment cap of £100,000.

Strutt & Parker’s calculations show that lowland farms over 182ha will be affected by the £100,000 cap. For this size farm, this equates to £549/ha.

Jonathan Armitage, head of farming, says: “Modelling suggests that if the farmer of the 182ha farm does not take the lump sum, they could expect to be paid £113,341 (which equates to £622/ha) over the period 2022 to 2027. This is based on how Defra has said payments will be reduced until 2024 and then on our assumption of a straight line cut from then to 2028.

“Therefore, the farmer might receive £13,341 or 12% less from taking the lump sum.  Or put another way, they could lose most of the payments they were due to receive in 2026 and 2027.

“It has always been anticipated that the sums of money would probably not be large enough on their own for wholesale change, but they may still bring forward some decisions and start some new conversations between landlords and tenants, and farmers looking for an opportunity to exit.”

If you would like to run the figures for your farm through the calculator, please contact rural.enquiries@struttandparker.com.

Example - 182ha farm