Farm diversification is still small business

I was a little surprised to learn that there are only 60,000 farms in the UK that sustain a full-time farmer, and that less than a quarter of these have diversified into other business areas that don’t involve the letting of buildings.

Defra produce some useful analyses of the farming industry, and I have been taking a look at a recent report on farm diversification that arises from their annual Farm Survey. You can download this report in pdf format here.

The position of agriculture in the UK economy is changing for the worse, with lower farm payments from the EU and declines in farmgate prices. A possible and rational response to these changing economic circumstances is for farmers to look to alternative sources of income other than conventional farming production by diversifying their business activities.

Defra define diversification as:

“the entrepreneurial use of farm resources1 for a non-agricultural purpose for commercial gain.”

The key findings of the extent of diversification as reported by Defra were:

50% of farms had diversified activity in 2006/07; the percentage of farms with diversification other than letting out buildings increased from 25% in 2005/06 to 27% in 2006/07

Total income from diversification was £430 million, 5% higher than in 2005/06; diversified enterprises generated 19% of the total income of farm businesses in 2006/07

For 27% of farms which had diversified activity, the income from their diversified enterprise exceeds the income from the remainder of the farm business in 2006/07

The dominant type of diversified enterprise is letting out buildings for non-farming use; 36% of farms do this and letting out buildings generates 60% of total diversified income

About 10% of diversifying farms discontinued their diversified enterprises in 2006/07 and another 10% started diversifying for the first time

57% of diversified enterprises have an annual output of less than £10,000; 11% of diversified enterprises have an annual output of £50,000 or more

That’s a lot of numbers. So what to make of it all?

I’m struck by the small-scale nature of these diversified farms. Most farm diversifications generate sales of less than £10,000. Around 2 to 3,000 farms make more than £50,000 from diversification.

So what kind of activities are involved in diversification. I took a look through Farmers Weekly to grab some ideas that farmers are pursuing:
here is the list I made

Open a farm shop
Rent farm accommodation to leisure visitors
Convert farm buildings into business premises (e.g. offices)
Open a green burial ground
Offer storage
Run a camping or caravan site
Get involved in milk processing, selling direct to consumers
Start an on-farm brewery
Grow Pharmaceutical crops
Offer a venue for weddings, concerts or parties
Build a wind farm
Make cheese

Have you come across any other examples in your locality? Add them using the comments box below