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These days, farmers do more than grow crops or raise livestock. In order to survive, many are diversifying their business and turning to new ways of making money. But should farmers be better supported to focus on their principal job of producing food? Marilyn Wright reports.
Weddings in the barn? Team building in top acre? Yurts in yonder field? These days farmers are stretching the definition of what it is to till the land in order to make ends meet. In the face of increasing energy costs and low food prices, diversification is seen by many as the best way to ensure the present generation on the farm is not the last.
Of course, farmers are not alone in their quest for a side hustle. In the aftermath of Brexit, and as a result of the pandemic, businesses in every sector have been forced to “pivot”. Chris Walsh, NFU Mutual farm specialist, is confident farms can join those shape-shifting to cope with the uncertain times.
“For a lesson in how to adapt to changing circumstances and reinvent business models, look no further than UK farmers,” he says.
“In an effort to boost their incomes and make sure their farms remain sustainable, they’ve proven remarkably inventive. Many have diversified into an array of activities, from glamping to festivals, to secure dog walking sites and selling their own home-grown products direct to consumers.”
In fact, 68 per cent of England’s 38,400 farms have diversified in some form according to figures from the Department for Environment, Food and Rural Affairs (Defra). The Farm Business Survey 2019/20 showed the total income from diversification activities was £734m – that’s an average additional income of more than £19,000 per farm.
The main diversified activity was letting out buildings for non-farming use, with 45 per cent of farms going down this route.
Expect a boom in the provision of farm accommodation and hospitality in the coming months and years, as farmers offer the public an alternative to travelling overseas
“The number of farmers who diversify beyond traditional activities is likely to increase,” says Walsh. Caravans, campsites and B&Bs are the most popular source of non-agricultural income among respondents to a recent NFU Mutual survey. And Walsh predicts more will follow suit.
“Expect a boom in the provision of farm accommodation and hospitality in the coming months and years, as farmers offer the public an alternative to travelling overseas,” he says.
Taking the leap beyond their core business can be daunting for farmers, but increasing numbers are prepared to give diversification a try. As well as holiday accommodation, farmers are turning to renewables, farm shops, and livery and equestrian events as ways to add a new income source beyond traditional farming.
Ian Wilkinson of Honeydale Farm in the Cotswolds says diversifying a farm is a learning experience. He created FarmED which runs events to promote and demonstrate regenerative farming and sustainable food production. “You have to feel your way, and speak to the right people,” he says.
“You can have business plans, and a clear mission statement, but at the end of the day, the market will tell you something different and you have to adapt your offer. It will change. But of course, farmers are really good at that.”
The trend towards diversification is also being driven by changes to farmers’ subsidy payments. Under the European Union common agricultural policy (CAP), farmers received funding via several schemes. The largest was the basic payment scheme (BPS), which made direct payments to farms based on the area of land under agricultural use. The House of Commons Library noted in 2020 that UK farmers received around £3.5bn in annual support through CAP.
Post-Brexit, Defra has been developing a new agricultural policy for England. In 2021, it began phasing out CAP-style direct payments to farmers across an “agricultural transition” due to last until 2027.
At the same time, the department will introduce a new Environmental Land Management scheme to reward farmers who undertake environmental work, including encouraging access to the countryside and mitigating climate change.
Speaking in the Commons in 2020, however, Congleton MP Fiona Bruce sounded a note of caution about the government’s plans. While she praised the innovation and diversification undertaken by many farmers, Bruce warned: “The priority for most of them is food production. It surely must also be the government’s priority to have a robust and resilient agriculture sector.
“It should be a sector where, in my view, farmers have the dignity and respect due to them for the incredible hard work they undertake to produce our food. Going forward, the emphasis on government financial assistance must be to encourage the sustainable production of food.”
The government is, however, confident the sector is on the right track. In the foreword to the Defra report ‘Farming is Changing,’ published in June, minister Victoria Prentis insisted: “This is an exciting time for English farming.”
The new system of payment for public goods is right, but it must support, not undermine, food production
But she conceded not all farmers shared ministers’ enthusiasm for the new system, saying: “Changes of this significance can be intimidating, and it is natural that many farmers are worried about the phasing out of direct payments. We will move to the new system gradually, and make changes where needed if the new policies do not work as intended. It is vital that farmers have time to adapt.”
Prentis added that the new rules would help food producers to stay competitive and “produce the high-quality food they are renowned for while protecting and enhancing the environment on which a sustainable, productive future depends”.
The new system has also come under fire from the Environment, Food and Rural Affairs (Efra) Select Committee. In its report, ‘Environmental Land Management and the Agricultural Transition,’ the committee called on the government to fully assess the affects the changes to agricultural policy will have on farm businesses.
Neil Parish, chair of the committee, said in the report: “The impact of this huge change on farmers’ incomes and entire ways of life cannot be underestimated.”
While many farmers are turning to new income streams to help them secure their business and add resilience, it’s not an easy decision.
“When I speak to farmers about their diversification, it’s clear how much planning, skill and passion is needed to make it work,” says Walsh. “As some farms are already aware, welcoming the public on to your land can introduce new risks.” Challenges include working out insurance needs, tax implications and risk management to make sure the relevant regulations are met.
And the challenges don’t stop there. Efra committee member Barry Gardiner told The House: “The principal job of our farmers should be producing food – and they need to do it in a sustainable way – but [NFU Mutual’s] latest survey shows over a third of farmers are using their land for non-agricultural enterprises. The new system of payment for public goods is right, but it must support, not undermine, food production.
“This means policymakers must get the rest of the value chain right. The government’s failure to resolve shortages in the labour market, whether vets, butchers or HGV drivers post-Brexit, has exacerbated food supply chain issues.”
But as the government continues to roll out the biggest change to agricultural support in 50 years, it seems diversification is here to stay.
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