Total income from farm diversified activities in 2019/20 was £734 million, according to Defra’s Farm Business Survey. And that figure is only likely to grow. Across all farms, income from diversified enterprises accounted for 28 per cent of total farm business income. The main diversification was letting outbuildings for non-farming use.

And with the gradual withdrawal of the Basic Payment Scheme, more farmers are likely to consider alternative income streams, according to Tim Coates, co-founder of agricultural bank Oxbury Bank.

He says: “The first step any farmer should explore when considering diversifying is whether the intended project is adding sustainability to their farming operation, rather than diversifying for the sake of it.

Finance for farm diversification

“And if that application for financial help is to be successful the business plan should be fully developed, well-thought through and show clear understanding of the plan’s objectives and projections.”

He says some applications were declined because they were not detailed enough, with banks unwilling to take a risk.

“However, if there is potential there is an opportunity to submit an update,” he says. “Before making a decision the lender will always need to understand the whole of the farm’s business operation. That will tell it about the holistic and historic nature of the business and give an indication of its micro-management.”

He adds they visited every farm submitting an application, finding it important to meet everyone involved in the business.

“In some cases, where there is a younger generation waiting in the wings, diversification is a great way of giving them something different to contribute to the family business,” Mr Coates says.