The legalities of farm diversification

Here agricultural paralegal Emma Mennell, part of the friendly Agricultural Team at Pearsons & Ward, gives her take on farm diversification and what to consider before you begin…

The total income from farm diversification activities on farms in the UK was £740m in 2018/2019. Therefore the financial benefits of diversifying into the leisure industry means that a farmer can supplement the farm’s income and make more money from the farm’s asset’s than they would yield from traditional farming methods. It is therefore no wonder that conversions of barns to wedding venues, farm cafés, open farms and equestrian yards are on the rise.

Providing new opportunities for the next generation 

Diversification of the family farm can happen for many different reasons and each family have their own motives for wanting to diversify. Some wish to diversify because of financial means due to the increasing pressure put on the UK farming industry and alleviate the dependency on direct farm payments, which are slowly being phased out.  Other families diversify because the next generation do not wish to take on a role of traditional farming and therefore diversifying the farm wholly or partly into a new leisure venture. In a recent survey by the NFU they found that a quarter of farmers looked into diversification of the farm to provide new opportunities for the next generation.

There are lots of key elements to consider when you are looking to diversify the farm. It is not just getting the idea off the ground itself, although this is a key part. You need to consider tax elements and whether it would affect any Agricultural Property Relief that you may have over the farm; you need to obtain the correct planning and have in place the correct leases or contracts should you be renting out part of the farm to a business along with adequate insurance.

Pearsons & Ward recently acted for an Equine Retirement Livery whereby we prepared a bespoke Livery Agreement for our clients as they had decided to partly diversify the family farm to provide for the next generation; their daughter is a keen horsewoman and so the choice was simple to move into the equine industry.

If you are thinking about farm diversification and would like some help and advice please do not hesitate to contact Emma Mennell at Pearson & Ward on 01653 692247.