The Tenant Farmers Association (TFA) has welcomed the publication of the long-awaited DEFRA consultation on the Basic Payment Lump Sum Exit Scheme.

The Lump Sum Scheme was one of the most talked about elements of the Health and Harmony consultation issued by DEFRA over three years ago. Although the aspiration for the scheme has now been significantly reduced, so that it now concentrates solely on those exiting agriculture, it could still be of benefit in a range of situations where individuals are ready to exit the industry.

TFA Chief Executive, George Dunn, said “The Lump Sum scheme was never going to provide the complete solution for those looking to retire from agriculture. However, as part of a portfolio, which might include a surrender payment from a landlord for a secure tenancy, sale of livestock and equipment and other pension provision, it could be a very useful catalyst. However, we will need to await the detailed rules before being able to fully advise our members.”

The TFA believes that three categories of farmer will find the new scheme attractive:

• Small scale owner occupiers who are reaching the end of their farming career without successors who can retain the ownership of their land but rent it out.
• Tenant Farmers who have already begun or could easily begin discussions with their landlords about tenancy surrender coupled with a compensation package from their landlord.
• Tenant farmers with succession tenancies with eligible and suitable successors waiting in the wings to take over their farms.

In respect of access to the scheme for owner occupiers, the TFA is disappointed that DEFRA has not used the opportunity to encourage longer term tenancies. Owner occupiers have the option of letting out their farms rather than selling them but are only required to offer tenancies of at least five years.

Mr Dunn concluded: “With the average length of term on a Farm Business Tenancy (FBT) only 3.21 years and with nearly 90% of all new FBTs let for five years or less, DEFRA should have taken the opportunity to improve this situation. In responding to the consultation, the TFA will be arguing that the minimum length of time on a new lease should be 10 years rather than five years. Longer term tenancies will drive innovation, resilience and environmental improvement.

“Both tenants and landlords have much to gain from this new policy. Tenants will gain directly through the lump sum payment scheme and landlords through the ability to resume possession of land that may have been tied up for a generation or more. We would encourage landlords to be open handed and reasonable in negotiations with tenants to ensure that this window of opportunity is not missed."