Many farmers are holding back on diversification this year as they await details of support systems and assess the implications of the cost-of-living crisis, a new survey shows.
While farmers see diversification providing a larger part of their incomes, many are currently waiting for more government clarity on policy and wider economic stability, according to NFU Mutual's research.
The annual diversification survey shows that 37% of farmers in the UK plan to increase diversification over the next five years.
A further NFU Mutual poll shows that most farmers (46%) are currently diversifying to boost farm incomes, with safeguarding their farm’s future a common reason (29%).
Other reasons for diversifying are providing new opportunities for family members (18%) while 7% are seeking to make use of redundant farm buildings.
Research carried out with over 1,650 farmers across the UK earlier this year found that income from diversification represented 12% of a farm business’ total income, down from 16% in 2021.
Whilst a post-lockdown staycation boom supported income from agri tourism, a rise in farm output prices pushed overall farm income above the previous year’s figure.
Against a background of uncertainty over new farm payments and more recently an expected new direct support scheme, 11% of farmers yet to diversify say they now plan to do so in the next five years.
Future farm diversification plans are also being radically changed by the ongoing energy crisis.
The poll reveals that seven in ten farmers (72%) believe that renewables are now the enterprise most likely to be successful in the future.
Chris Walsh, NFU Mutual farm insurance specialist, said for many farmers diversification was now essential to keep a decent income flowing into their business.
However, he said it was not surprising to see that some farmers were holding on their plans, while many were waiting for more details of an expected new farm support scheme.
"For new ventures involving the public, such as holiday accommodation, food processing and retailing, it’s now vital to assess the likely impact of the cost-of-living crisis on public spending."
In 2022, holiday accommodation – camping, glamping, caravan sites, B&B and holiday cottages - were the most popular diversifications developed by farmers, NFU Mutual’s research shows.
In joint second place was renewable energy together with non-holiday property letting.
