Farm Diversification: Sideline or Survival?
Farm diversification is not a new phenomenon. Decades ago, the family running the dairy farm trundled around the village with a trolley delivering milk to increase their level of income. Long before FarmStay UK was formed in 1983, farming families have been offering bed & breakfast accommodation, or a pitch for your caravan.
Research by DEFRA in 2018/2019 suggests that 65% of farm businesses have diversified. The same research puts total income from diversified activities on farms in England at £740m, an increase of 6% on the £699m from 2017/2018.
Why are 48% of farmers planning to set up or expand diversification enterprises (NFU Mutual Research 2019)? Because the profitability of farming businesses is going to be reduced over the next seven years.
Every post-war government has wanted cheap food for its population. (On average, a family in the UK only spends 8% of their disposable income on food; for future debate but very relevant to the type of food we produce). The Agriculture Act in 1947 set out to subsidise farmers to produce cheap food but to still allow them to make enough return from their investment and labour. Support started with a guaranteed payments system which ran until we joined the EU and since then we have had Intervention, IACS, SFP, BPS and other species-based support such as the Ewe Premium Scheme and the Suckler Cow Premium Scheme; direct payments to keep the price of food low.
The next seven years
Our departure from the EU also means we cease to benefit from the Common Agricultural Policy. Over the next seven years the level of support received in direct payments will decrease and end. The actual rate at which these payments will diminish is still unclear but go they will yet government will not want to see the price of food increase. This will clearly hit the profitability of UK farming.
Diversification is critical
‘Diversification is critical to smaller farms’ survival’ says Claire Saunders, Director of the Prince’s Countryside Fund. For a long time, our smaller farms have had a different sort of diversification, hiring themselves out to other local farms; milking cows, tractor driving, lambing and harvest. This was and continues to be a way of keeping the family farm going without the need for spending any capital.
Any new diversification enterprise to draw in the general public will need to be innovative and of a high quality which will usually require a capital investment.
