Starting Diversification Enterprises
Making a living from farming is not easy. According to the Scottish Government, eighty-five per cent of farm business income is from subsidies. Scottish farmers make an average loss from agricultural activities of £14,600 a year. These losses are more acute for sheep and beef farmers in Less Favoured Areas who are estimated to be making a loss of £27,400 a year without support.
With our departure from the European Union, the future of rural payments is uncertain. Robin Dandie, Agricultural Business Advisory partner with Johnson Carmichael, is advising farmers to review what percentage of their income is from subsidy, and how low these subsidies could drop for their farm still to be viable and financial commitments met.
Clearly, now is the time to diversify. The Scottish Government reports that farms that diversify beyond traditional agricultural practices have, on average, incomes £19,600 a year higher than farms that don’t. That’s quite an incentive!
Examples of diversification include activities related to tourism, for example, camping, glamping or Airbnb; renting out buildings, for storage space or special events; and promoting the use of one’s land for anything from grass-sledging to music festivals.
According to the NFU Mutual’s Diversification Report, 65% of farms in England have already diversified with a total additional income of £740 million in 2018-2019. As our case-studies show, farmers are natural entrepreneurs!