Spreading risk through diversification is giving many farmers new opportunities, and with the latest statistics revealing total income from diversified activities in 2017/18 was £680 million, an 8 percent increase from 2016/17, it’s clear it’s becoming a consideration for most farm businesses.
Despite this, advice from professionals is not to rush into diversifying, and consider ‘passive’ options first, which don’t require too much time spent on them, such as renting buildings or renewables.
Hannah Moule, rural chartered surveyor and planning consultant at Moule and Co, is speaking at Energy and Rural Business Show on March 3 and 4 2020 on the subject of farm diversification, and says there are key considerations to make when diversifying your farm business. “Don’t rush into diversifying if it is covering up cracks elsewhere. Really concentrate on getting your core farming business as good, as efficient and profitable as possible before adding a new enterprise into the mix.
“Consider ‘passive’ options first – things that don’t need much time spent on them, e.g. renting out buildings, renewables. Unless it is a passive income, you will be having to put a heap of time, energy and brain power into a successful new business. Don’t think they are easy things to do ‘on the side’ – make sure you are in a position, financially and time wise, to invest in your new business,” explains Hannah.
“Then consider how much risk and capital you are prepared to invest, this will be determined by your current financial and business position, and what is your motivation to diversifying. Are you prepared to spend £10,000 or £100,000. This will help determine what type of businesses you should invest in.
Consider your location – when you are diversifying, you may potentially be selling to people. You aren’t producing a commodity in grain or beef; your customer is now a human being! Then consider your assets, consider your skills and interests and help narrow down what it is that is suitable for you,” adds Hannah.
Hannah Moule is speaking at Energy and Rural Business show in the Rural Business Expo ‘How-To’ workshops, covering:
- How to identify what type of alternative enterprise is right for you / your farm / your business
- What are the current and future consumer trends that can be applied to the rural sector, and how to take advantage of them in your new business?
Also speaking at the event Mark Russell, partner at land agent and national property consultancy, Carter Jonas. Mark will deliver some sound advice for diversification planning. “Our advice is to keep it simple and play to your strengths or those of your trusted contacts.”
Mark explains: “To grow a new crop, make sure you have support from someone who understands that crop. Converting a building for your own diversification is great if you are keen and understand the business. If not, let your local market dictate the building’s use.
“Think laterally – where you own a property, use it as an asset base; many successful farming families have non-farming or off-farm income in the pot,” he says.
“Step back with the next generation and think strategically about what you are and why you are doing it – this may seriously change the direction for your business,” adds Mark.
Farmers looking to diversify in 2020 and beyond are invited to attend Energy and Rural Business Show, taking place in Peterborough, at the East of England Arena, next 3 and 4 March. The event will showcase the latest business diversification options, renewable energy opportunities, energy and environmental management and advances in low emission vehicles for agriculture.
The event will host expert speakers in its ‘How-To’ workshops over the two days of the event, offering practical guidance on everything from ideas for alternative land and building use, to growing hemp, and general diversification tax guidance, as well as an exhibition including innovative farm diversification options and advice.
Energy and Rural Business Show is run in association with the CLA and NFU Energy. The event is free to attend, and places can be booked today: http://www.energyandruralbusiness.co.uk/