Diversification – Spreading the Risk for the Future.

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It goes without saying that at present Agriculture is at a crossroads with all possible roads leading to an uncertain future. The ongoing Brexit negotiations, possible snap general election, lack of clarity over future farm subsidies and funding, long winded trade deal discussions, proposed changes to the capital tax system in the UK and Tenancy Reform proposals can be baffling even to those of us in the industry. How then, should farmers and landowners be planning for the future when that future is so unclear? The key to the future will be “diversification”. This term is by no means a new one but the options available for a farm business or landowner to diversify away from pure traditional agriculture are many and varied and can provide alternative income streams to support existing businesses moving forward. In its simplest form, diversification may simply mean entering a stewardship scheme, taking less productive land out of agriculture and receiving a payment for providing environmental benefit. This has been going on for years in the UK but will become a much larger part of farmers incomes moving forward under current proposals and we should all look closely at both current and future schemes to identify other areas of land suitable for such schemes. Farmers and landowners should also review the use of their farm buildings, as many will find there is potential for diversification into alternative uses, both of traditional and modern buildings. Changes to the planning system over recent years has made obtaining consent for conversion of buildings slightly easier in some areas, providing potential to convert to residential, commercial or even light industrial uses. Demand for small office and light industrial units remains strong in many areas with potential to provide vital non-farming income to businesses in these uncertain times and also providing premises for other rural businesses to operate, helping to keep employment in the countryside. Farmers should not forget about the use of their land when looking at diversification possibilities, although it may not be prime development property that is not to say that a small scale camping venture, regular car-boot event or small festival would not work without hindering the farming business and could provide alternative income, even if let to a third party to run. If access to your land is not ideal for large scale events, consider something smaller which utilises your assets, including your remoteness and secluded nature. Providing access over your land, either for horses, on foot or with mountain bikes, can entice visitors who will either pay for the privilege or who may benefit other enterprises on your farm, such as a tearoom or livery business. Finally, farmers should regularly review their farming business on the whole. Just because you have always run a business that way doesn’t mean it can’t change and a switch of enterprise from dairy to beef, arable to horticulture or sheep to equestrian, if only in part, can improve your bottom line while still retaining the original business, maintaining employment and providing a future for another generation. There are a range of different grant schemes available to aid with costs of some of these projects, the availability of funding varies and advice should be taken at an early stage to ensure any project qualifies and is able to take full advantage of available funding. In short, the best way to survive uncertainty is to spread the risk and have a number of different income streams, not just relying on traditional agriculture. For advice on diversification and possible grant schemes across the Yorkshire region please contact Andrew Hardcastle at Lister Haigh on 01423 860322.