Nearly two-thirds of Britain’s farms have diversified, but families should think very carefully before following the crowd.
Opportunities for farms to diversify are almost limitless. Success stories are everywhere, suggesting all farmers should consider broadening their horizons beyond just agriculture. But that is not always the case, according to William Waterfield of the Farm Consultancy Group.
“Diversifications nearly always require a different skill set from what most farmers possess,” he said. “Those who find that their farm business is struggling should be putting more time and effort in to the core operation rather than diluting that effort it in to something else.”
Defra figures show 61 per cent of farm enterprises have diversified. And, with lower levels of direct support likely post-Brexit, it is natural for farms to challenge themselves to look for opportunities to derive new income streams.
For some that might be as simple as growing a non-food crop – using their core agricultural skills and existing machinery to produce for a new market.
Other farms will move away from farming completely and utilise assets such as land to create attractions for tourists, or build equine facilities. Done right, they can have a huge impact on the sustainability of a farm business.
“Within a matter of years they can be significantly bigger than the farm,” Mr Waterfield said. “I know of an example that operates on 1 per cent of the farm’s land area but turns over four times what the farm turns over, probably earning three times the profit.”
The list of options is huge, but suitability and feasibility are two important watchwords, Mr Waterfield said.
“If you identify that the business is going to face challenges or has the capacity to change, you should look at your options. “The process should start with some really good analysis of where the farm business is now. Look at your strengths, weaknesses, opportunities and threats. Bringing in someone who is not part of the family or the business can bring fresh perspective. This does not have to be a consultant, just someone you know who can throw ideas about with you.”
Mr Waterfield said the catalyst for a diversification often comes from outside. “A lot of the successful cases I have seen have involved an outside party or a younger member of the family – or perhaps someone with a different skill set – coming in to get hold of it.
They have the time and enthusiasm to see it through.”
Popular alternative diversifications: