Farmers look to diversification to offset income falls

As diversification becomes an increasingly important means of supporting farm businesses, farmers are being urged to adopt a professional approach, with careful planning and good management.

The advice follows the latest NFU Mutual survey in April and May, which showed that diversification now accounts for 13% of the average farmer’s income.

See also: Find all our diversification advice in one place

The research also showed that the number of farmers planning to start a diversification in the next five years has risen to 17%, compared to 15% in 2023.

The most popular diversifications are renewable energy (8% of farmers), property letting (7%), and holiday accommodation (6%).

Chris Walsh, NFU Mutual farm specialist, said: “For the vast majority of farmers, running a diversification business is a way of supporting their farming enterprise, as EU legacy Basic Payment Scheme support is phased out.”

But while farmers were hardworking and innovative, he warned that diversification is rarely a way of making a “quick buck”, and that successful schemes require careful planning, good management and long-term commitment.

The NFU Mutual has therefore created a new diversification hub, with key advice for farmers wanting to widen their revenue stream. Some of the suggestions are:

• Plan diversifications which are a good fit with your farming business
• Identify your strengths and areas where you could add value to your existing model
• Evaluate whether you have the necessary skills, resources and commitment
• Thoroughly research the market, local demand, and any existing competition
• Work closely with planners, highway authorities and insurers at an early stage
• Cost out plans in detail and include contingency funds
• Research the availability of local workers.