Love him or loathe him, this week saw the return of Clarkson’s Farm on Amazon Prime. Having already seen the rather unlikely face of British farming attempting to rear sheep and setting up a farm shop, this series sees Clarkson dabbling in cows, and branching in to the restaurant trade. Or at least trying to anyway.
Whilst the show is entertainment for some, diversification in the farming sector is becoming a necessity, if it is not that already.
With the price of raw materials sky rocketing in recent years, and the supermarkets squeezing many to breaking point, an estimated 33% of farms have already diversified. And they’re the lucky ones. We are seeing an increasing number of farms coming to the market because the current owners just can’t afford to keep it running.
A diversification project could be anything from selling a few eggs to a full blow farm shop; renting out a cottage to a fleet of shepherds’ huts. It could even be branching out in to forestry creation and the carbon market, or utilising land parcels for development.
Taking the decision to diversify your farming enterprise is an important one. The opportunities and rewards can really change a farm’s fortune. But nothing good was ever easy. There are a number of key areas to consider before you embark on such a project:-
Strategy
What are trying to achieve? How will that fit into your existing operation? If a diversification project is likely to direct resources away from your existing projects, how will you mitigate this?
Finance
How will you manage any capital payment or impact on your cash flow until you start seeing returns? Will a sudden influx of non-farming income into your current structure cause difficulties with Agricultural Property Relief? Are you creating a potential Inheritance Tax problem that will need addressed?
Restrictions
What can you do with your land? Are there restrictions contained within the title to your property? Can anyone enforce them? Do you need to get permission? If so, from whom?
Safety
Will your project see members of the public, potentially (hopefully), in large numbers on your land? How will you manage that risk in the context of maintaining a working farm? Will your insurance cover what you’re planning to do? Do you need insurance for what you’re planning to do?
There is a lot to think about and a lot you need to get right. That is why it is important to take professional advice from the outset, and our specialist Land and Rural Business Team are here to help. If you’re considering diversifying your farming business, or even considering breaking in to the sector with new ideas, Thorntons can be with you at every step of the journey. Please contact a member of Thorntons’ Land and Rural Business Team on 03330 430350
