The uncertainty brought upon by Brexit and the subsequent subsidy loss that will follow once Britain stops forming part of the EU's Common Agricultural Policy (CAP) is a big concern for British farmers.
Rural consultants Bruton Knowles attended the Three Counties Farming Conference in Malvern, where they identified farm diversification as a possible solution to bridge the subsidy gap.
“As things stand around 62% of farmers in the UK have at least one form of diversification business, helping to generate some £580m,” said Bruton Knowles’ Ben Compton.
“In the face of highly volatile farm incomes, successful diversification could generate a greater proportion of farmers’ incomes.”
Regarding types of diversification, Compton suggests there is a lucrative market for farmers to convert old or unused farm buildings into commercial or holiday lets.
“Full planning will probably be needed to convert existing buildings to alternative uses, but planning rules have been relaxed and should be in favour of sustainable proposals,” adds Compton.
Bruton Knowles advise to first carry out a business overview and financial health check before embarking on any project. They also identify the importance of analysing the new chosen market and its competition in depth to establish its business potential.
“Financing conversion projects has always been a problem, but with 40% Rural Development Programme for England grants currently available through the Leader or the Growth Programme, the direct costs can be reduced for certain types of project.”
“Farmers should be approaching lenders to obtain competitive offers bearing in mind their borrowing capability and a sole trader, partnership or limited company status might be better for specific enterprises.”
“They should look particularly closely at location and proximity to their target market - and undertake a market appraisal with set objectives, targets and timelines to ensure success.”
“Current farm businesses should be stable and not too highly geared, and lastly but not least, farmers must have genuine passion and desire for any diversification project they undertake."
“As always, farmers are advised to take professional advice when looking at budgets, grant funding options, borrowing requirements, planning, marketing and the business plan.”
Source: South West Business