Guide to diversifying your farm business

Guide to diversifying your farm business

In the volatile world of farming, in which traditional farm businesses are sensitive to input prices and extreme weather, more and more farmers are now choosing to diversify. This strategy not only helps protect farm owners incomes during turbulent farming periods but it also helps them to become more profitable. In fact, 62% of UK farms are reported to have some form of diversification in place.

Whilst it can be as simple as adding new business activities to traditional farming, it can also be a complex process, but the good news is that the benefits can far outweigh the risks. Here’s our guide to things you need to consider when looking into diversifying your business.

 

Things to think about when diversifying 

  • Why you want to diversify and what your goals are 
  • What implications it will have on other aspects of your established business
  • What other farmers/businesses in your area have done and if it will work for you
  • The cost of your diversification project and how you will finance it
  • The legal requirements of your new business venture
  • Whether it will be profitable and when you could expect it to turn a profit

If after careful consideration of the above you believe your business will be in a better position after diversification then you can start to plan how to go about this transition.

 

Benefits of farm diversification

  • Most obvious benefit is increased revenue. More than half of all UK farms have used some form of diversification in their farming business – bringing in an average of £10,400 extra revenue per farm*
  • Minimising your risk of being reliant on farming as your sole income, especially when this can be affected by factors that are out of your control such as extreme weather
  • Making better use of your farm’s resources and characteristics
  • Finding new uses for your existing skills
  • Integrating your farm within the rural economy and creating jobs

 

Examples of farm diversification

  • Livestock products – e.g. producing and selling sheep cheese, or having llamas on the farm
  • Crop products – e.g. growing and selling speciality flowers or harvesting crops that produce energy
  • Retail outlets – e.g. opening a farm shop  (a really good example of this is Daylesford Farm in Gloucestershire which transitioned into a farm shop, restaurants and also a spa – https://www.daylesford.com/locations/kingham-gloucestershire/
  • Offices – e.g. turning unused farm buildings into offices you can rent out or use to support your own business venture
  • Tourism – e.g. using unused land for camping or even glamping, or turning unused farm buildings into holiday cottages or opening up your lovely farmhouse as a bed and breakfast

We are a great example of a business that has diversified to ensure we maximise profit. In addition to traditional farming, we let out our old farm buildings as offices to numerous small businesses. We have also turned our land into extensive yard space to stock the hundreds of products that our merchant’s business supplies.

 

Is there financial support you can get to fund your diversification dreams?

Yes, financial assistance in the form of grants or loans are available for some businesses to develop plans for farm diversification. This can be provided by the Rural Development Programme for England (RDPE), as well as commercial banks and also from capital and revenue funds from a range of places such as the public sector, and charitable and private sources. 

For more information on your funding options, the government page (https://www.gov.uk/guidance/diversifying-farming-businesses) on this is very informative.

 

How do we help farms to diversity?

We provide a number of products and services that help farms to diversify. These include:

View our infographic on ways we can help here.

If you’d like to find out more, please call our experts on 0121 351 3230.

We will also be exhibiting at the Farm Business Innovation Show on stand H660 on the 6th and 7th November at the NEC in Birmingham. 

Please feel free to call us for expert advice on 0121 351 3230.

* https://www.gov.uk/guidance/diversifying-farming-businesses

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