It’s the start of the new year. You may be thinking “what can I do to drive my farming business forward in 2022?”. Whilst considering the various things you’d like to do, perhaps farm diversification was a priority? A valuable way of gaining resilience in an otherwise volatile industry, farm diversification covers an abundance of opportunity. Need some inspiration? Read on…
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Why consider farm diversification?
Data analysed by Department for Environment Food & Rural Affairs (DEFRA) in their latest Farm Business Survey 2020/2021 , showed that the average diversified enterprise income from the sample of 37,100 farms, was £20,200. When analysing enterprises that generated the most income, it was found that farms with food processing and retailing businesses made up 21% of total Farm Business Income (FBI). Farms renting out buildings to third parties made up 28% of total FBI. You can view the latest Farm Business Survey here, to see the results in greater detail.
Just under a third of UK farmers (29%) plan to make major changes to their business operations at this point. If you share this mindset, read on for some ideas to inspire a farm diversification on your holding.
The following are in order of average enterprise income (£/farm), according to the sample from DEFRA’s Farm Business Survey 2020/ 2021.
Letting buildings for non-agricultural uses
Changing the use of agricultural buildings to rent them out to third parties, can be one of the most profitable types of farm diversification, providing an average of £20,200/annum. The amount of investment required is determined by the building’s type, condition, and location, as well as the intended tenant usage. Additional fees may be incurred depending on how the structure will be developed and used.
Changing the use of an agricultural building will, of course, need planning approval. Although the degree of planning approval may alter with use class, converting a structure offers a variety of options. We’ve written about commercial rentals before,. See here for more information regarding the legalities.
Farm food and beverage retail
The processing and retailing of farm produce generated on average, £10,200/annum. Obviously, income is scale dependant. This heading encompasses many methods, including: farm shops, food delivery services, farm butcheries, pick your own, cafés and more.
The method of sale, local demographics, population and marketing become very important considerations when attempting to increase income from these enterprises. We’ve written about farm shops and retail, find more information regarding regulation here and important considerations for success here.
Tourist accommodation and catering
Farms that offered tourist accomodation or catering, on average, generated £6,400/annum additional income. Income from these enterprises is heavily dependant on the offering to consumers. For example, renting space for camping and caravanning is simple, but will be unlikely to generate the level and longevity of income of glamping, which boasts additional facilities (greater investment required).
Planning permission is likely to be required, as is licensing for campsite enterprises. Click here for a useful considerations when considering a glamping enterprise.
Farms that diversified into renewables generated on average, £6,300/annum additional income. This was down to 7% from 12% of the average FBI in 2019-2020. Income will vary between the different types of renewable energy installations (solar, wind, biomass and anaerobic digesters etc.). Renewable energy offers an opportunity for long-term passive income, dependant on whether you are leasing to a developer or setting up in house.
This industry is seeing large sale growth due to the drive towards the UK net zero target of 2050, so opportunity will continue to grow.
Recreation and events
There are numerous opportunities within these enterprise categories. From wedding venues, to seasonal events such as pumpkin picking or maize mazes. These enterprises offer an injection of cash over a short time period if implemented well.
Since the start of the Covid-19 pandemic, consumer focus towards experiences has increased further, as has the wedding market. It is estimated that approximately £14.7 billion is spent on UK weddings per year currently.
Thorough market research will be required to evaluate local competition and demand. You must also be aware of planning and licencing implications of weddings and events.
Enterprise brainstorming list
- Wedding venues
- Business functions
- Experience days
- Maize maze
- Pumpkin picking
- Storage solutions
- Trade units
- Office lets
- Farm shops
- Commodity vending machines
- Coffee shops or café’s
- Trade stand events
Hospitality & residential
- Air B&B
- Farm café
- Rental property
- Barn conversions
Outdoor & sport enterprises
- Obstacle courses/ farm gym
- Cross country running
- Farm and educational tours
- Bike tracks
- 4×4/ motorsport tracks
- Clay pigeon shooting
- Driven shooting/ stalking
Equestrian & animal
- DIY Livery
- Manèges and arena’s
- Cross country and eventing arena’s
- Dog training/ agility
- Petting farm
- Ground source heating
- Biomass boilers
- EV charging stations
- Battery storage
Agricultural - added value
- Production of pet/horse food and bedding
- Food and beverage production – e.g. rolled oats
- Niche cropping – e.g. lavender
- Rare breeds
- Pick your own – e.g. fruit picking
There are many opportunities with regards to farm diversification. Some may be more suitable to you and your farm than others.
Farm diversification can be a useful tool in achieving better resilience within your farming business.
Unsure how to go about farm diversification within your business? Contact us today for a free, no obligations initial consultation.
Unsure of what farm diversification enterprise is for you? Use our free diversification discovery assistant. Simply fill out the short questionnaire and receive a brief, free review of what farm diversifications may suit you and your family business,