It’s common knowledge that due to the uncertain future of agricultural policy, increasingly volatile commodity markets and rising input costs, many farmers are looking towards alternative opportunities and income streams. An additional concern for the UK agricultural industry is the decrease in demand for meat and dairy products caused by intense focus on climate change by the wider population and media.
According to the Department for Environment, Food and Rural Affairs (DEFRA) 66% of UK farms are already diversified. For these businesses, farm diversification has always offered improved resilience and cashflow. This offering is becoming undeniably important and attractive to the remaining 34% of rural businesses. Furthermore, farm diversification often extends an opportunity in many ways, for the UK farming community to reconnect with the consumer.
Is now a good time to diversify? Has the boat already sailed? Read on for an insight into why we think now is as good a time as any to consider farm diversification.
Feel free to contact us today and we’ll gladly offer our advice and assistance to you regarding farm diversification.
Since the arrival of Covid-19 to the UK in January 2020, the term “staycation” significantly increased in popularity by over 500% in 2020 alone. According to Statistica, 28% of UK citizens are more likely to take a holiday within the UK due to the pandemic. Furthermore, UK tourism is the fastest growing industry in Britain currently, with expectations of a 3.8% growth rate per annum until 2025. Many have forecasted that the “staycation” trend is here to stay.
It can be concluded that there is huge opportunity for rural businesses to capitalise on tourism. Although not suitable for all farming businesses, many can leverage their local environment, building and land assets to create lucrative recreation and tourism enterprises. Glamping is a good example of farm diversification targeting rural tourism. Read more about tourist accommodation considerations here.
Throughout the Covid-19 pandemic, issues within supermarket supply chains were made evident by empty shelves. However, as consumers looked for groceries elsewhere, many local food producers and retailers thrived. Family run farm shops across the UK innovated to allow continual operation and service to the public, who soon came to realise the importance of UK food self sufficiency. Farmers demonstrated their innovative ability by converting to social distancing, offering deliveries and ultimately widening their product offering. It is suggested that many consumers will seek to continue to source food from local vendors and producers after the pandemic. Growing awareness of food mileage and carbon footprints is also supportive of shopping local.
Whether its farm shops, cafés or food and beverage production, it is clear that there is increasing opportunity for farmers to sell directly to the consumer in many ways. Read more about the legislation surrounding farm retail here, and wider considerations here.
Increased focus on climate change and the environment is prevalent wherever you look. Opportunities for farm owners to diversify into renewable energy are becoming more numerous. From solar panels to EV charging points and battery storage, uptake of these technologies is on the rise, with a compound annual growth rate of above 9%. This is encouraging as the UK agricultural industry attempts to meet the NFU’s net zero target of 2040. Read more about renewable energy opportunities and benefits here.
There is also opportunity for farms to restructure using new government funding as set out in the Agricultural Transition Plan, to generate income whilst being greener. New subsidy schemes such as the Sustainable Farming Incentive and Farming Transformation Fund offer farmers the ability to capitalise on the governments new environmentally cognisant agricultural policy. Carbon trading and auditing is a rapidly emerging way for farmers to access a new market, driven by offsetting and the environment.
To conclude, if you haven’t considered farm diversification already… now is a great time to do so. With many thriving markets to penetrate, the rural economy is an exciting place to be. That being said, it is not without its challenges. Strong and measured business planning, is essential. Farmers looking to diversify must ensure their proposed enterprises are both feasible and harmonious with existing business operations. If you are unsure always seek professional independent advice.
Feel free to contact us today for a free, no obligations initial consultation regarding farm diversification opportunities.
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.