Brexit is set to be the biggest shake-up in agriculture for decades. The anticipation of great change is stirring a lot of new thinking amongst farmers and, most notably, sparking a significant ‘diversification drive’. As the new buzzword of choice, almost half of the UK’s farmers (48%) are now planning to diversify the resources they already have and expand into other business ventures.
Why? Well, it makes logical sense to tap into more than one income stream. You just have to look at recent research, which tells us that diversified activity has already brought an average of £10,400 extra revenue on farm. Taking a new approach can protect your income from economic decline, with the opportunity to invest in a variety of assets in order to reduce the risk of all investments dropping in price at the same time. Furthermore, diversification has the capability to support those who rely on season trade, like many farmers do.
The opportunities:
There is an almost unlimited list of initiatives and options to explore, with some seeing a great boom in demand as a result of this turbulent year.
- Tourism & leisure – the tourism sector has truly suffered during this difficult period, but UK ‘staycations’ have seen a surge in trade once the first phase of lockdown eased. Demand for on farm pods, yurts, camping pitches and converted buildings has exploded, particularly on platforms such as Air BnB.
- Training and promotion of on farm activities – more than ever, are we seeing consumers take an interest in what is happening on farm and where their food comes from. From milking demos to educational farm walks, there is opportunity to boost both your profit and a consumer’s on-farm knowledge.
- Alternative crops – consider growing and selling speciality flowers, fruit, vegetables, energy crops and pharmaceutical crops. With sustainability continuously dominating the headlines, it is an interesting avenue to explore.
- Shortened supply chains – ‘shop local’ has undoubtedly become one of the most popular principles to come out of 2020. Whether it’s from the farm gate or online, selling direct to the end consumer can be a lucrative opportunity to explore. Meat, vegetables and dairy products all lend themselves well to direct sale opportunities. Vending machines for products other than milk are growing in popularity, providing a 24/7 access to the very best local produce.
- On farm added value – Why not diversify what you do with your milk, and make your own cheese, butter or even ice cream? The opportunities to add value to primary product are only limited by imagination. None food products such as leather and fleece are also avenues to explore.
- Waste products – an anaerobic digestion system could be an investment, turning the slurry produced by dairy cows into electricity. Using this to power your farm could be hugely beneficial to your costs and production.
How do I diversify my farm?
It is important to say that if this is something you wish to explore, then it requires great consideration of what would be the most beneficial to your farm. The first thing you should do is focus on the assets you already have and can utilise. Are you making the most of your on-farm resources, equipment and waste products? Could you engage with your local community or work with other farmers? What’s your USP?
It doesn’t just end there, there are several other questions to ask when deliberating if diversification is right for you:
- Who is going to choose/buy your products and why will they choose you over some other business?
- Is this a growth market and how big will it be in the future? What factors are driving the future market?
- Will you be competitive on price? And is the venture profitable?
- What will your start-up costs be? Can you develop a robust business plan that runs alongside current farm activity?
- Have you got the drive, energy and ability to deliver success? Do you have the support of your family and friends?
Don’t forget the core farm business…
It can be quite easy to get caught up in any new venture and distracted from your core business. One question you should be asking yourself before starting this adventure is, do you have the skills, resources and commitment to make it work or would it take you away from your other responsibilities? It is about striking the right balance and creating the best possible business model for you.
In a changing world, adaptability is key. There will inevitably be winners and losers in UK farming post-Brexit. Diversifying, making solid farm business plans and balancing your business endeavours will play a key role in ensuring you end up a winner.
How can we help?
We strive to understand your business as well as your aspirations so that we can offer comprehensive, objective advice. Our Agri Food and Farm Business Teams can work with you to answer all the important questions – creating a clear, concise picture of which diversification venture will work best for your farm’s needs.
Keep an eye out for some of our further blogs on direct sales and adding value.
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