More farmers are planning to start or further develop diversification activities, according to new research conducted by NFU Mutual.
The rural insurer’s 2024 diversification investigation shows that the number of farmers surveyed who were planning to start a diversification in the next year had risen to 17 per cent, compared to 15 per cent in 2023.
The survey also revealed that 40 per cent of farmers already running diversification enterprises plan to further develop them over the next five years – up 3 per cent on 2023’s figure.
UK farmers’ income from diversification enterprises on average accounted for 13 per cent of farm turnover in 2024, the same figure as in 2023.
Renewable energy remains the most popular form of diversification among UK farmers, with 8 per cent operating schemes such as solar power, wind turbines or anaerobic digesters, up from 6 per cent in 2023.
Chris Walsh, NFU Mutual Farm Specialist, said, “Farmers are hardworking and innovative by their nature, and this helping to create diversifications which complement their farming activities and make their businesses stronger.
“From vineyards and wedding venues to solar farms and wind turbines, farmers are making the most of the resources available on their land to make their businesses more sustainable. In many cases, they are also providing career opportunities for farmers’ families, while creating rural jobs and boosting local economies.”
Walsh warned that diversification is rarely a way of making a ‘quick buck’ and that successful schemes required careful planning, good management and long-term commitment.
He said, “For the vast majority of farmers, running a diversification business is a way of supporting their farming enterprise, as EU legacy Basic Payment Scheme (BPS) support is phased out.
“There are some fantastic success stories out there, such as English wine producers becoming some of the world’s highest rated, also fantastic wedding venues, and hugely popular glamping sites.
“To help farmers plan how to incorporate diversification into their agricultural businesses we have developed a Diversification Hub with a wealth of information and a range of case studies showcasing successful schemes.”
NFU Mutual diversification planning checklist:
- Plan diversifications which are a good fit with your farming business
- Thoroughly review your existing farm business to identify your strengths and areas where you could add value to your existing model
- Make a full and frank assessment of your assets – including people, land, location and buildings
- Evaluate whether you have the skills, resources and commitment to make diversification work for you
- Thoroughly research the market, local demand, and existing competition for your proposed diversification
- Work closely with planners, highway authorities and insurers at the planning stage to avoid problems later
- Cost out plans in detail and include contingency funds to help absorb future price and interest rate increases
- Research the availability of local workers – often a challenge for hospitality or retail diversifications in remote locations