Poor trade deals and Brexit prompt farming diversification

The loss of EU support, coupled with the prospect of trade deals which could see UK produce undercut by imports of lower standard food, has seen the country’s farmers rush to diversify into new income streams, according to a new survey.

Chris Walsh of NFU Mutual

Launching their annual report on farm diversification, rural insurers NFU Mutual said that the biggest shake-up in agricultural finances for 50 years was the main driver behind the change.

Published yesterday the report showed that 37 per cent of UK farms surveyed were using their land for non-agricultural enterprises. Representing a jump of six per cent on the year, the Mutual said the change showed a significant acceleration towards non-farming activities, with 30 per cent of UK farmers running diversified enterprises on their land in 2019 and 28 per cent in 2018.

The fastest pace of change was recorded in England, where an estimated 43 per cent of farms operate diversified activities on their land, with Scotland recording 39 per cent - while only 16 per cent of Northern Ireland farms had adopted major diversification projects.

NFU Mutual spoke to 1,652 farmers, selected to be representative across the board and asked them about their non-farming diversification businesses and future plans.

However, there was a significant increase in the proportion of business turnover from non-farming activity – which shot up from 11 per cent in 2020 to 16 per cent in 2021.

But more farmers are likely to follow the trend, with changes to post-Brexit farm policy and support payments leading a further 11 per cent of farmers yet to diversify to state that they now plan to do so in the next five years.

Of those sticking to the core activity of food production, the main reason was the desire to concentrate on farming and making the best use of land and skill sets.

Being too old to start a new venture was the next biggest reason (22 per cent), followed by not having family members interested (eight per cent). An unsuitable farm location was another barrier accounting for six per cent, but only five per cent said that lack of finance was the reason for not diversifying.

Of those already operating diversified enterprises, over a third said they expected their enterprises’ contribution to their incomes to increase in the next five years.

Renewable energy was the most popular non-farming enterprise with farmers seeing harvesting power from the sun and wind as long-term investment winners in the climate emergency, followed by non-holiday property letting. Holiday accommodation was in third place, followed by livery/equestrian, farm shops and caravan/camping sites.

“Farmers are increasingly concerned about the long-term sustainability of their businesses as EU subsidies are replaced with environmental improvement payments,” said Chris Walsh, NFU Mutual Farm Specialist.

With more farmers seeing diversification as the best way to ensure the present generation on the farm was not the last, Walsh added, “Farmers always have to be ready to adapt to changing markets, but the huge changes we are now seeing to farm support mean farmers are now having to take a very hard look at their businesses and take tough decisions on the future.”