Welcome to our latest research publication on farm diversification.

In addition to the political uncertainty as a result of the indecision over Brexit, farms are facing the challenge of subsidy reduction, rising costs, lower market prices and the importance of energy security, sustainability and changing consumer attitudes.

This publication seeks to highlight the potential opportunities for the agricultural industry with a special focus on “making the most of your farm” and the latest diversification trends.

We also launch the Savills Rural Vibrancy Index that tracks some of the key drivers and trends in farm diversification.

Farm diversification is not a new phenomenon, and indeed it’s not for every farmer or farming business but for many, making the best use of a farm’s assets to enhance farm income from sources other than conventional farm production makes sense.

A review of the farm business will highlight any potential opportunities for diversification, which may include:

• Adding value to farm produce – on-farm processing, direct/online selling or farmers’ markets
• Developing a new enterprise – for example, glamping, adventure sports, pets, leisure and recreation activities
• Developing buildings – holiday lets, weddings, residential, workshops, office space
• Farm energy – renewables or anaerobic digestion.

According to DEFRA, in 2017/2018 two-thirds of all farms had diversified activities, an increase of 2% on the previous year. Total income from diversified activities in 2017/2018 was £680 million and across all farms income from diversified enterprises accounted for 22% of total farm business income.

The most popular farm diversification is letting buildings for non-farming use, with 45% of all farms letting buildings. This includes holiday accommodation, commercial units or office space. However, as consumers have become more demanding so farm diversification activities have become more consumer-focused, sophisticated and varied.

Don’t “wait and see”

The traditional dynamics of UK agriculture will be transformed as the industry prepares for a life without the Common Agricultural Policy. The Agricultural Bill 2018 announced a transition away from the Basic Payment Scheme (BPS) towards a new system of financial assistance for delivering public goods through a new Environmental Land Management Scheme (ELMS). By 2028 farmers will no longer receive a subsidy based on the acres they farm. The last approach that anyone should be considering is let’s “wait and see”. Now is the time to review the farm business, which may include:

• Revisiting farm contracts
• Looking for collaboration
• Reviewing costings
• Considering how the farm can be of most value to the public in order to receive public money and to capitalise on the growing area of private investment in natural capital
• Increasing farm productivity
• Reviewing the farm’s assets and the opportunities for diversification.

_{Read the articles within Spotlight: Farm Diversification below.}