Almost half of British farmers are looking at diversifying their businesses ahead of the biggest shake-up of farm funding for decades, new research suggests.
With Brexit now underway, farmers in the UK are looking at a 2020 'diversification drive' to help further support their businesses.
This is according to rural insurer NFU Mutual, who says that changes to government support are driving farmers downs new paths in order to boost profitability.
Forty eight percent of farmers are planning to set up or expand diversification businesses, moving into new areas such as tourism, hospitality, retail and renewable energy.
This figure has doubled since NFU Mutual carried out similar research in 2018 and found 23 percent of farmers were planning to expand or start diversification enterprises.
“The next seven years will be crucial for the farming industry,” explained Chris Walsh, NFU Mutual’s Farm Specialist.
“Because of this, many farmers are looking at new business opportunities in order to spread their risk.
“Farmers have always had to adapt to changing times, and a number have been diversifying for decades, but even more are now deciding to support their work with new ideas.
“Whether it’s building holiday cottages, launching a wedding venue, or opening a farm shop, not only can these new businesses supplement the farm, they often provide other members of the family with a crucial role.”
NFU Mutual's new research, unveiled today (7 February), shows how a quarter of farmers are planning to diversify in order to create business opportunities for family members.
Mr Walsh added: “There is only room for a certain number of farm shops, holiday cottages and wedding venues so farmers planning to diversify need to do careful research and costings before they start converting cow sheds into cafes.
“Farmers and their families also need to have the right skills - particularly if they’re going to be working with the public. It’s a big change looking after a demanding wedding party if you’re used to being on a hillside with a flock of sheep all day.”
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.
Looking ahead, the report suggests there may be new opportunities for farmers to access government financial support for diversification schemes as changes to agricultural support are rolled out.
Defra statistics show that diversification activity brought in £740m of income in 2018/19 – up 6% on the previous year.