• Goal to create new revenue streams
• Cost of living crisis fuels uncertainty
• Diversification hub to advise farmers
More farmers plan to boost their incomes by diversify their businesses to generate additional revenue streams.
Farmers see diversification providing a larger part of their incomes over the longer terms, but they are holding back on investment due to uncertainty over government support, according to research from NFU Mutual.
Some 37% of UK farmers plan to increase diversification over the next five years, up 3% on 2021’s figures, according to the rural insurer’s annual diversification survey which was published last month.
But many farmers are waiting for details of forthcoming farm support schemesbfroe taking the plunge. The drop of 4% to 33% this year follows a sharp increase in 2021 when farmers pushed ahead with diversification plans after the coronavirus pandemic.
A further NFU Mutual poll shows that most farmers (46%) are currently diversifying to boost farm incomes, with safeguarding their farm’s future the second most common reason (29%).
Other reasons for diversifying are providing new opportunities for family members (18%) while 7% are seeking to make use of redundant farm buildings. But some are reluctant to invest because of the cost of living crisis.
NFU Mutual farm insurance specialist Chris Walsh said: “For many farmers, diversification is now essential to keep a decent income flowing into their business with high input costs seriously affecting profitability in every sector of agriculture and horticulture.
“Farm diversification is a sophisticated sector of the rural economy, providing significant income and employment opportunities. It givess the public the chance to visit the heart of our spectacular countryside and enjoy our excellent food straight from the grower.
Research carried out with over 1,650 farmers across the UK earlier this year found that income from diversification represented 12% of a farm business’ total income – down from 16% in 2021.
While a post-lockdown staycation boom supported income from agricultural tourism, a rise in farm output prices pushed overall farm income above the previous year’s figure, explained Mr Walsh.
Against a background of uncertainty over new farm payments and more recently an expected new direct support scheme, 11% of farmers yet to diversify say they now plan to do so in the next five years.
Future farm diversification plans are also being radically changed by the energy crisis. NFU Mutual’s latest poll reveals that seven in ten respondents (72%) believe that renewables are now the enterprise most likely to be successful in the future.
Camping, glamping, caravan sites, B&B and holiday cottages are the most popular diversifications developed by farmers, suggests the NFU Mutual research. In joint second place was renewable energy together with non-holiday property letting.
Mr Walsh said : “Farmers’ renewable energy schemes are providing an increasing amount of the nation’s power, reducing reliance on fossil fuels and helping us towards the net carbon zero goal.
“We’re not surprised to see that some farmers have put a hold on their plans while waiting for more details of an expected new government farm support scheme. For new ventures involving the public, such as holiday accommodation, food processing and retailing,
Mr Walsh said it was vital to assess the likely impact of the cost-of-living crisis on public spending. NFU Mutual had launched a new Diversification Hub to help farmers understand the opportunities and risks involved, he added.