According to the Department for Environment, Food & Rural Affairs (DEFRA), around half of all farms include some form of diversified activity.
There are scores of ways that a farm can diversify, but the reasons for diversifying tend to be:
- to bring in extra revenue
- to ‘future proof’ the business against ever-changing commodity prices
- to make better use of the farm’s resources and employee skills
- to enable development.
Recent social, economic, technological, environmental and commercial changes all mean that opportunities for diversification are flourishing.
Regulatory changes have also helped, thanks to the introduction of agricultural permitted development rights, which offer greater opportunity to develop certain agricultural buildings – most notably to residential use. Obtaining permission can
be a challenge (around 60% of applications are refused), but success is possible with a
well-considered strategic approach (Bidwells’ success rate is 95%).
Diversification: A few different ideas
Poultry – both broiler chicken and free range egg production – generates good profits and a very acceptable return on capital: on average 10%. However, profitability is highly sensitive to price volatility and a new venture will demand a considerable input of capital.
The main challenges involved are gaining planning consent and finding a processor who will offer a contract to take your birds or eggs. Bidwells can advise you on site selection and work through the planning and environmental consents. We’ve also created a poultry model to help you through the business planning process.
Sustainably produced timber continues to outperform commercial property, bonds and equities. As forestry’s benefits for flood mitigation, rural employment and carbon fixation are increasingly appreciated, prices will continue to rise.
Outlets selling quality, locally produced food are extremely popular. To maximise footfall you can create a retail or leisure ‘destination’ with extra elements, from a children’s playbarn to a good café and other independent retail options again.
Wedding and event venue
A quality rural wedding venue can be extremely lucrative – playing host to corporate events outside of the wedding season. However, your venue must be in a good location, have ‘wow’ factor plus the flexibility to accommodate different function sizes. Overnight accommodation adds to demand/value and broadens the offering of holiday accommodation out of season.
Rural office space
Changes in infrastructure and planning regulations are making rural office developments attractive options.
- Rural broadband coverage has developed apace and is now top of the Government’s policy agenda to ensure we’re “match fit” post Brexit.
- Quality office space in towns and cities is becoming harder to find as changes in planning regulations make it easier to change offices to residential use. The better the location and quality of your development, the more successful it will be – particularly in more challenging markets.
A Listed building or heritage asset on your farm can be hugely expensive to maintain. When a client with this issue asked for our help, we obtained consent for three new ‘£1m-plus’ houses and two conversions to make the restoration and part-conversion of their barn viable.
The move also funded the building of a new farmstead 800 yards away in a better location.
A tried and trusted approach
Not all diversification options will suit you or your farm/estate. Every option will have implications on your time, your core farm activities, cashflow and staffing. The Bidwells team will work with you to understand your objectives and discuss funding, profit targets, legal and tax requirements and how you will market your new venture. We help you to shape your vision and make it a reality.
1. Identify your assets and resources. What do you have available and what could be used more productively?
2. What are your objectives, both long and short term? Take a strategic view as smaller projects now may impact on how you can add value in the future.
3. Is your project viable? It is important to consider the socio-economics of your area.
4. What is the most appropriate diversification scheme for your property?
5. Check whether you need planning permission. Most diversification projects will require it.
6. Do you need funding? You may qualify for a grant, particularly if your scheme will benefit the local economy.
7. Know the tax implications. Address this early on to avoid unexpected tax liabilities later on.