How Britain’s Farmers Are Diversifying
Many farmers across the UK are having to seek out new streams of revenue through diversification. Although it’s true that the COVID pandemic has certainly presented a unique set of challenges, farmers have been diversifying their businesses long before these events unfolded at the start of 2020.
Farming in the UK has changed significantly in the past decade. Statistics from the latest NFU report into farming diversification suggest that more than 65% of farms in England have diversified, and almost half of farmers plan to expand or set-up further diversification within their UK farming operations. (See https://www.nfumutual.co.uk/farming/farming-diversification/)
In this article, we’re exploring why so many UK farmers are having to diversify their farming operations. We look at what the benefits are to those who diversify and explore the many different ways UK farmers are diversifying their income streams to deliver more stability, more profit, and more exciting ways of working.
Why do farmers need to diversify?
The UK Dairy farming sector has fallen into crisis, largely due to the falling price of milk. This alone has seen as much as half of these businesses fall into major financial issues, with many being forced to close their operations completely. Livestock farmers have fallen victim to a range of diseases, including Bovine TB, Foot and Mouth Disease, and Bluetongue. With decreasing subsidies and a more competitive market, collectively, this has wreaked havoc with their livelihoods.
In order to survive, farmers have needed to diversify and turn to other forms of income outside of their traditional practices.
According to the latest DEFRA statistics, in 2018/2019 alone, a total income of £740M was earned via diversified activities, a rise of just over 6% on the previous year.
Farm Diversification takes many forms, with new initiatives emerging all the time. From farming holidays for those spend time learning new skills, helping out, and generally living the day-to-day life of a farmer. Right the way through to newer breeds of livestock and crops; think alpacas, ostriches, llamas, essential oil crops, and more.
The benefits of farming diversification
We’ve already discussed the ‘why’ being diversification, and for many farmers, the key is finance. However, there are other advantages to be had that cannot be achieved with traditional farming methods.
Flexibility. Being able to respond to the changing needs of consumers is fulfilling. With diversification, there is often a level of adaptability that cannot be achieved with traditional farming models.
Developing New Skills Can be Fun. For many within the farming community, there isn’t often an opportunity to learn something new. Running a new operation can help farmers develop new skills while also increasing an individual’s business network. Farming can sometimes get a little lonely, which is why having a new opportunity to get out and meet other like-minded entrepreneurs while learning new skills can be hugely beneficial.
More Income. The driving force behind any diversification project is usually money motivated. Undertaking new activities, harvesting new crops, running a new business, or taking on new livestock; it can help increase farming income and result in a better quality of life for all on the farm.
Increased Security. Having long-term financial security can relieve pressure on a farming business. By branching out into new unchartered territories, it can increase the number of revenue streams for a farm. This can ensure that should a single source of income fails or slow down, and there are multiple options to fall back on.
Farming diversification isn’t designed to replace traditional farming activities and methods altogether. Although it has been known for new income streams from renewed activities to overtake those of the traditional farming activities, diversifying a farm can simply be a means to continuing with traditional farming methods and being able to sustain existing operations while remaining profitable.
Key Considerations for Farmers Looking to Diversify their Business
Many farming operations in the UK are being driven to diversify their business due to their farming finances. While this is a major source of motivation, there are many things to consider.
Exploring Unmet Needs Locally
Researching the local market and looking for any unmet demands for a service or product could present an overlooked opportunity to broaden the horizons of a farm and open up new avenues for business. Trying to fulfil an existing demand is often an easier route than having to generate demand and then meet it.
Utilise Existing Resources
Lots of farms have resources and buildings that aren’t being fully utilized. Successfully putting all available resources to use can be key to unlocking the maximum earning potential for a farming business. Establishing any space of buildings that are currently under-utilized is a great springboard for ideation.
Pursuing Areas of Interest
Successful farming diversification can often take inspiration from personal passions or interests. For any diversification to be successful, it must be fuelled by a desire to succeed that goes beyond the financial rewards.
Existing Skills and Knowledge
Putting existing know-how and farming expertise to good work can increase the chance of success in any enterprise. Making a move from traditional farming to a new diversified business model requires knowledge and skill; it’s important to not overlook the need for this before spending any money and investing in resources.
The Different Ways UK Farmers Are Diversifying in 2021
As we’ve already discussed, a significant amount of money is made each year in the UK through farming diversification. Adaptability, resilience, and strength form the foundation for success in this sector and are skills many farming businesses have needed to put to use in order to survive, and in some cases, to thrive.
Essentially, diversification involves utilizing a farm’s existing land, buildings, machinery, or other assets in order to turn a profit and make money from an activity beyond their traditional farming methods. It can either complement or replace the existing farming model, but the main purpose is to make additional money.
Various factors, such as a farm’s location, available space, access to customers, workforce, skills, and interests of the team, can all determine which type of diversification is right for a farm.
FACT: A survey conducted by DEFRA surveyed existing farms that have already diversified. Over 63% of the farms viewed their diversification are significant to their farm’s financial viability. More than 90% confirmed their decision to diversify as a success.
If you’re considering diversifying a farm, read on to find out the many different ways others have achieved success in the UK. Some of the top choices include:
Camping/Caravan Site (27%)
Renewable Energy (20%)
Holiday Accommodation (20%)
A Full List of Ideas for Ways to Diversify a Farm Include:
From Llama farms to selling Alpaca fibers or selling increasingly popular dairy or meat alternatives.
Be it Wind, Solar, farm bi-products, or energy crop, there are lots of ways farmers are diversifying to produce energy that is already being used to power at least 10% of homes in the UK.
Utilizing land for camping, glamping, pods, events, or even bed and breakfast.
Opening up a farm shop of your own or renting the space to another vendor.
An outbuilding or existing ground can be transformed into an event or wedding venue.
Developing offices or houses on a property can help generate additional revenue, particularly when they are leased out over an extended period.
Workshops and Training
Learning the tricks of the farming trade, offering experience days, or providing workshops.
Selling and growing specialty crops, flowers, and pharmaceutical crops can be a great way to diversify income streams.
Optimizing Waste Products
Utilizing an anaerobic digestion system will require an initial investment; however, the ROI is proven and measurable. This transforms slurry from the dairy cows and turns this into electricity to power the farm. Any unused energy will go back to the grid, generating more revenue for the farm.
While there are many practicalities to consider, such as planning permission, investment funding, resources, and much more, there are lots of opportunities for farmers in the UK to successfully diversify their business. Considering 90% of those who’ve already taken the plunge have deemed their ventures a success, it certainly does present a compelling case.
Consultation with an experienced professional is key before embarking upon any type of farming diversification project in the UK. You can either hire a farm diversification consultant or specialist firm to help you work through the myriad of options in the pre-planning phase. For those without the initial money to invest, there are also many specialist finance packages offered for the farming sector, in particular, for farmers looking to diversify their income. Renewables’ projects that involve the production of energy have, in the past, received investments from sources external to their originating farm.
Whether we look at the UK farming industry or beyond, diversification is proving to be successful, and imaginably, it will continue to do so for many years and decades to come.
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