How agriculture is changing: The importance of diversification

A Grade II listed barnMore than 90% of farm businesses are family based small and medium sized enterprises, who need to maintain their wider holdings often with additional income from partners and other business opportunities.

Nationally, 62% of farms already have some form of diversified activity to provide wider economic opportunity to support farming families and the rural economy (Source: Defra). As farm income supports fewer family members, and is impacted by volatility, for example in input prices and due to extreme weather events , diversification can introduce complementary income streams that help families continue to farm.

Commonly tourism, creative industries, storage and workshops, professional services and bespoke food production and processing all flourish in a rural environment and help sustain other businesses. Farm shops offer both an outlet for local produce and a wider range of goods. Farm holdings offer a high quality environment for those who enjoy a rural setting. Over one third of NFU members host renewable energy on farm. Increasing farmers will also store energy for local network use.

internet speedIt is essential that digital infrastructure such as broadband and mobile phone coverage improves in rural areas, then the business potential will increase.

However for the farmer there are huge risks with diversifying their business. In obtaining and investing capital, meeting regulations and associated business costs and then maintaining viable long term businesses.

The lack of infrastructure restricts tenant potential. National guidance in the National Planning Policy Framework requires local and neighbourhood plans to support diversified economic development, but this needs to be supported by more positive devolved policies, which embrace the importance of rural growth and promote rural service development.

Local Enterprise Partnerships and local authorities also have roles to play in providing the business skills and funding support farm that farm businesses need.

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Last edited on: 08:08:2017

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