South West farmers diversify to create business opportunities for family members
Almost half of UK farmers are planning to pursue diversified income streams to support their agricultural businesses, according to new research from leading rural insurer NFU Mutual.
With changes to Government support and the way Britain trades with the rest of the world ahead, farmers are diversifying their businesses to boost profitability and fortify their farms for the future.
Forty eight per cent of farmers are planning to set up or expand diversification businesses following Brexit, moving into new areas such as tourism, recreation, hospitality, retail and renewable energy.
This figure has doubled since NFU Mutual carried out similar research in 2018 and found 23 per cent of farmers were planning to expand or start diversification enterprises.
The sharp increase in diversification comes as agriculture undergoes the biggest change to funding in decades following the UK’s exit from the European Union.
In a report published today (Friday, 7 February) NFU Mutual provides advice on setting up new diversification businesses and looks at a range of successful schemes from wedding venues and glamping to kefir dairy products and cosmetics.
Rich in natural capital, many South West farms are making the most of opportunities in tourism, hospitality and recreation and looking to other family members to run these new enterprises. NFU Mutual’s report highlights that a quarter of farmers say they would like to diversify to create business opportunities for family members.
For over 100 years, Inwood Farm in Nether Stowey, Somerset, operated a conventional dairy and arable model but it became challenging so the Jeanes family looked at ways to diversify. Today Naomi Hansford, one of three siblings in the third generation, runs the very successful Quantock Lakes wedding venue. She explained: “The seed of the wedding and events business was sown eleven years ago when the family had the foresight to dig a couple of lakes with the stunning Quantock Hills as the backdrop.
“We hosted charity events and then weddings from a marquee attached to the original Rustic Barn. The next step was the creation of the Quantock Barn, a bespoke build combining old and new, featuring the impressive oak bar handcrafted by my brothers. With the ability to host bigger weddings came the demand for accommodation to support it. Converting the old stone farm buildings into accommodation set around a courtyard was a key turning point.
“We saw significant growth in bookings and as a family we agreed that one of us should head up the wedding business.”
Naomi came onboard full-time, bringing her prior experience heading-up digital marketing for Clarks and managing events for various brands including Red Bull.
Diversification has helped the family combine their skillsets working together as a team but, more importantly, it has enabled all three siblings to have a clear role. Naomi’s brother Ian manages arable and farm maintenance while Andrew leads the commercial arm including lettings and a caravan site.
Naomi says: “If we hadn’t been on the wedding journey, I wouldn’t have been able to come back to the family business. It hasn’t been an easy journey. There was a period of time when we didn’t make a profit but as our journey to diversify has been a gradual one, we reaped confidence from successes and we stuck to our vision. My advice is to make the most of what you have. Look at your assets and play to the strengths of the people you have around you.”
Roz Hills, NFU Mutual’s South West Regional Manager said: “South West farmers have always had to adapt to changing times, and a number have been diversifying for decades. But even more are seeking ways now to support their agricultural work with new ideas and protect their farms for present and future generations.
“Whether it’s building holiday cottages, launching a wedding venue, or opening a farm shop, not only can these new businesses supplement the existing farm, they often provide other members of the family with a crucial role in the business.
“Our research shows nearly half of farmers are either looking into setting up new businesses on their land or expanding existing diversification ideas, with a quarter planning to diversify in order to create business opportunities for family members.
“However, farmers need to do careful research and costings before they start converting cow sheds into cafes.”
The report stresses the importance of detailed planning to minimise risks to the public and employees and make insurance of new diversification schemes straightforward. It also highlights the importance of looking at the financial implications of setting up non-farming activities to avoid higher Inheritance Tax Bills.
NFU Mutual’s report, together with a series of videos and podcasts produced to help farmers considering diversification, are now available to download here nfumutual.co.uk/diversification
NFU Mutual advice for farmers considering diversifying
Diversification means using your farm’s assets, such as its land, buildings or machinery to develop a new business activity. Diversification ventures usually set out to provide additional revenue and can complement the agricultural activity or may even, over time, replace it.
Before you start, consider:
• Do you have the skills, resources and commitment to make it work or would it be a distraction from the core farm business?
• Have you fully reviewed your farm business and identified strengths and areas where you can add value to your existing model?
• What are your assets – from people, land, location, buildings, finance to skills – and have you realised their full potential?
• What market and demand is there for your diversification venture?
• What makes your farm unique and sets you apart from the competition?
• Have you asked the experts for advice? For example, speak to insurers at the planning stage to ensure you understand the risks and have the right level of cover to meet your needs.