Farmers are being advised to consider ‘passive’ options for diversification before launching into time-intensive projects.
Diversification is becoming increasingly important as farms seek to spread risk and generate more income.
Rural chartered surveyor and planning consultant Hannah Moule, of Moule and Co, said there are key considerations to make when diversifying your business.
“Don’t rush into diversifying if it is covering up cracks elsewhere,” she said. “Really concentrate on getting your core farming business as good, as efficient and profitable as possible before adding a new enterprise into the mix.”
She advised thinking about ‘passive’ options first that don’t require too much time, such as renting out buildings or renewables.
“Unless it is a passive income, you will be having to put a heap of time, energy and brain power into a successful new business. Don’t think they are easy things to do ‘on the side’ – make sure you are in a position, financially and time wise, to invest in your new business.”
Next, she said you should think about what types of businesses you should invest in, based on how much risk and capital you are prepared to invest – which will be determined by your current financial and business position.
Your location and current assets, skills and interests, are also key to narrowing down the type of business that is suitable for you, Hannah adds.
Meanwhile, Mark Russell, a partner at land agency and property consultancy Carter Jonas, advises keeping it simple and playing to your strengths or those of your trusted contacts.
“To grow a new crop, make sure you have support from someone who understands that crop,” he explains. “Converting a building for your own diversification is great if you are keen and understand the business. If not, let your local market dictate the building’s use.
“Think laterally – where you own a property, use it as an asset base; many successful farming families have non-farming or off-farm income in the pot.”
Both Hannah and Mark will be speaking at the Energy and Rural Business Show, which takes place on 3-4thMarch 2020, at the East of England Arena, Peterborough.
For top tips on diversifying your farm business, look out for our special feature on diversification in the January issue of Farmers Guide.