Diversification

Farmers and land managers have always sought to make the best use of their assets. The very large fall in farm incomes over the last five years in all areas of farming has forced attention onto the subject.

Reforms of the Common Agricultural Policy (CAP) have reduced the price guarantees for food production, but at the same time have increased the sums available for support of new enterprises. Many farmers, faced with a situation where they can no longer rely on a guaranteed market for their produce, will need to consider diversification.

Diversification is the name given to the process where farmers seek alternative income, other than from growing food crops or conventional livestock keeping. Most farmers will adapt their enterprises in some way, to meet the needs of the market and maintain their livelihood. Small scale changes, such as growing more of one conventional crop or changing livestock regimes do not deliver diversification.

There are many reasons why farmers seek diversified incomes, and the process has been going on for a long time. The main reason might be the particular suitability of the farm (for instance a large and handsome farmhouse well suited to farmhouse bed and breakfast) the location of the land (for instance on the edge of a village where there is a high demand for horse pasture and stabling) or the skills and interests of the farmer (for instance a new visitor enterprise, such as an open farm, or sporting enterprises). Many successful enterprises will have been added on to an existing farm business and adapted to fit in with existing resources.

Grant aid is sometimes available from the Department for Environment, Food and Rural Affairs (DEFRA) as part of the English Rural Development Scheme (ERDP), especially if the proposed enterprise will create employment.

Developing a diversified enterprise is undoubtedly a challenge for farmers traditionally skilled in the business of food production. Often different management skills are needed, such as public relations and marketing. Most new enterprises will also be subject to a range of additional rules and regulations such as business rates, planning consent, insurance and health and safety regulations, hygiene and so on. There are, however, many examples where well planned diversification has been a great success and provided new incomes and employment in rural areas.