With the demise of Basic Payment Scheme (BPS), that figure is set to grow, and UK farmers will want to give serious thought to a vital new revenue stream. Diversification could be your smartest move in 2022. *1
Caleb Roberts Insurance Services understand diversification, whilst our own Company Director, Jeanette Fox, embraces this on her family farm by generating additional income from ‘holiday lets’.
Its a sector that is being discussed more and more as a way for farm businesses to break even, if not make profits more consistently. Farming strategies, particularly in small-medium enterprise farms, which make up the main rural landscapes, traditionally struggle to achieve net profit gains without government subsidy schemes such as the basic payment scheme
New generations of farmers are finding innovative ways to make money using their agricultural land. Whilst farming is often more a way of life than just a job, and one which many would never dream of giving up, more and more arable and pastoral farmland owners are supplementing their income through diversification – expanding horizons both on the farm and in their careers.
So what options are there for diversification?
Diversification can be within the sector and outside of the agricultural sector. Below are some examples:
- Use of alternative crops for feed, food or medicinal
- Changes in livestock management and or livestock.
- Alternative production methods, such as regenerative, controlled environment & organic.
- Reducing the food(supply) chain (on-site abattoirs, processing units and farm shops, online direct sales & vending machines)
- Production of produce such as butter, cheese, ice cream, cider, wine, wool & hides.
- Contracting for other farmers
- Leasing land
External diversification routes: –
- Agritourism – Accommodation, activity holidays, weddings etc
- Property rentals
- Farm shops and other retail ventures.
- Training (Animal husbandry training, crop cultivation training, traditional skill training)
- Non farming contracting
- The use of biofuels, anaerobic digester plants, composting plants and other renewables
So, if you have a field going fallow or buildings which aren’t turning a profit, why not follow in the footstep of some of these entrepreneurial farm owners…
Charlie Moreton and his family found a new use for part of their Warwickshire farm in 2011 when, with wheat prices low, he suggested they put on a “wild running” event instead. Designed to test mental and physical strength, skill and stamina, their Wolf Run – a 10km run across natural terrain – features 24 obstacles including lakes, fallen trees and cargo nets, and has so far seen more than 100,000 people take part.
“As a family, we’d always been sports-mad, so the suggestion made sense to explore,” says Charlie. “Rather than just a picturesque run round parkland, I wanted to offer something more extreme.”
The event fosters a festival atmosphere with its own DJ, and an Alpha Award is presented to anyone who completes all 4 events in a year. Social media was key to advertising the endeavour, whilst collectible participant T-shirts also spread awareness. “At most events, you’d get a cheap T-shirt that would shrink in the wash and you’d only wear once. I had “technical” ones made and this was and is a big cost, but it’s what runners want and far better than any advertising,” Charlie says.
A spare room with a difference
One of the most popular diversification methods for farmers in the UK is property letting – whether that be long-term letting to a tenant or running short-term holiday lets. In 2019, NFU Mutual reported that 15% of farmers who had diversified operated a property letting, making it the second most popular form of diversification after renewable energy. *3
Cashing in on the rise of the staycation, some farms are converting empty barns into holiday homes or building cottages, utilising less productive land for camping and glamping in a bid to attract ramblers and rural holidaymakers. After all, developers are often interested in buying up land so why not take up the mantel yourself and support your local economy in the process?
In the small rural town of Dolgellau, north-west Wales, couple Richard and Laura Ellis used local expertise and materials to convert a dilapidated stone cowshed on their 100-acre LFA farm into an impressive holiday home, which won the 2016 Royal Welsh Agricultural Society’s Peniarth Estate Silver Trowel award for the best new farm building.
“In winter it can be quite harsh here. We’re only a few miles from the coast, which funnels the wind across the farm, so we’d need a new barn to over-winter any cattle,” says Richard, explaining that the farm is in a Site of Special Scientific Interest and so opportunities to invest were limited. “As a result, converting the old cow shed was our only option to earn extra income.”
The staycation market means property could earn around £74,000 a year letting to holidaymakers through sites such as Cottages.com with roughly one peak week in summer generating a rental income close to that achievable through a month of long-term letting.
Demand for short breaks has raised considerably in recent years with properties which allow short breaks all year round making on average 35% more bookings than those that don’t offer short breaks at all.*4
Farm getaways are ideal for those looking to catch up with friends and or family in permanent or semi-permanent accommodation, enabling those offering the most appealing accommodation and facilities to cash in throughout the year, not just during traditional peak periods
Brewing up business
Sussex farmer Duncan Ellis found a boozy use for his empty dairy buildings after “chatting to a chap at a village party to celebrate the wedding of William and Kate” who “suggested I turn my malting barley into beer” – a chap who turned out to be the commercial director of a local drinks distributor.
Farming combinable crops with cows and sheep near the Long Man of Wilmington, Duncan uses his own malts to brew the now-established brand Long Man beer from plough to pint, with about 20% of Church Farm’s Propino spring malting barley going into the beers.
Head brewer Jamie Simm says of the self-sustained process: “Not only does it offer a level of control which only a handful of other brewers have, but it is also environmentally sustainable.”
Whether brewing beer, distilling whiskey or something else altogether has always been your dream, barriers to diversification still exist, both on a farm-to-farm basis and within the nationwide or global perspective. some of the common barriers which repeatedly appear are.
- Lack of resources (including time, labour and focus)
- Lack of equipment
- Insufficient, or lack of, skills
- Inadequate finances
- Inflexible behaviours and mindsets (traditionalism)
- Unsuitable location
- Global competition
- Regulations and legislation/unsupportive government
- Market changes
- Undeveloped networks and eco-systems
- Inappropriate infrastructure
- Lack of, or insufficient, knowledge exchange/training
Advice and training in skills to facilitate diversification are barriers and as such provision of these is key. A variety of training options including peer-to-peer; expert-to-peer; expert-to-practitioner and practitioner-to-practitioner are all beneficial. As such, governments, innovation networks and agricultural advice bodies continue to support schemes that offer informed advice, mentoring and training opportunities to farmers to help them choose alternative strategies within the agricultural domain, or outside of it, which may have improved benefits to the sector, whether those be financial or environmental.
The most important thing for any farmer considering diversifying is to do their homework and get the right advice. The correct financial, legal advice and insurance advice can minimise the risk of wasting time and money and maximise chances of making a healthy second income. Changes in the use of your land, new equipment and endeavours, or putting on events will all require a refresh of your insurance cover. Talk to the experts at Caleb Roberts about what you will and won’t need.
1. CLA, Are you considering diversifying your farm business in 2022?
3/4. Shelley D’Arcy – Vice President Property Recruitment at cottages.com Holiday lets ‘could earn farmers around £74k a year’ -2020