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Farm Diversification: Top tips for diversifying your farm business

November 18, 2021
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farm diversification

Farm Diversification: Top tips for diversifying your farm business

Most farms across the UK will struggle to survive without some form of farm diversification. this is the sad truth of the current situation for farmers across the country. Farmer’s are now looking for ever more innovative ways to diversify their farm businesses so that they can generate a liveable income. We hear from Annabelle Carmichael to find out her top tips for farm diversification from an accountants perspective.

“Long gone are the days where farmers were strictly farmers; increasingly farmers are entrepreneurs – they’re craft beer brewers, fresh produce sellers, petting zoo operators, wedding venue hosts, clothing retailers and anything they want to be.” This is according to Annabelle Carmichael, principal of accountancy firm Carmichael Kingham & Co, who shares her top tips for farmers who are looking to diversify.

While I think it is fair to say that farmers have always diversified into other agricultural markets, increasingly farmers are now diversifying into sectors unrelated to agriculture. Notably, I have seen a merino wool farmer enter the women’s clothing design and retail market, and more and more farmers are entering markets such as venue hire, pop-up food stalls and B&B lodging.

There are pros and cons to both options; arguably the biggest advantage to entering another agricultural market is the transferable knowledge and resources the farmer already has, whilst the biggest risk is typically the capital-intensive nature of agricultural segments. Regardless of the segment, it’s difficult to escape the need to invest in expensive equipment. Conversely, the biggest advantage of entering a sector unrelated to agriculture is the lack of capital outlay, there are few industries that rival the capital outlays required in agriculture. However, the disadvantage is that the farmer is required to learn new skills and enter a market in which they likely have no expertise or contacts.

The stumbling blocks are unique to each farmer’s skillset and diversification plan; however, farmers that diversify rarely regret it and often wish they had done so earlier. Farmers often hesitate due to the risks associated with business change and there’s no doubt that diversification carries risks, but with diligent planning, these risks can be mitigated or minimised to a manageable level. My biggest tip is to have a plan. If you know that you want to diversify but don’t know which route to take, sit down at the kitchen table with family, employees and anyone who understands your business and brainstorm ideas. It sounds almost juvenile to suggest such a thing but it’s truly the best way to start your diversification plan.

Once you have narrowed down your diversification options choose one option to work on. You may have three really good ideas; however, if you don’t have sufficient experience and bandwidth, all three are likely to fail, so choose one and put everything you have into making that particular option a success. Once you have achieved a level of diversification you can explore the alternative options if desired.

I’m a big believer in ‘if you build it, they will come’ which goes hand in hand with one of my favourite phrases: ‘have a go’. If you find that in your area people aren’t paying to eat nibbles and sip wine whilst listening to a jazz band, perhaps that’s only because the ‘wines and tunes on the lawn event’ hasn’t been built yet. If that’s something you can envisage on your farm, have a go. Build it.

Don’t underestimate the small ways you can diversify, such as selling eggs or flowers from the road. There isn’t a big risk in selling produce this way and it can work as a stepping-stone into other areas of diversification

If you are planning a farm marketing strategy to promote your farm business then we would also recommend seeking support from marketing advisors, you can Check out our farm marketing strategy guide here, or you can book a consultation with us here.

Article taken from farmer’s guide

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How much would you need to sell to invest £600 per month in your business? 

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Every farmer and producer is unique, and so are th
Every farmer and producer is unique, and so are their products and businesses. So why would they all have the same marketing package?

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Farm marketing: Using Instagram to market your meat box business

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