Farm businesses planning to increase income through diversification are being urged to make sure that their expectations are realistic and their planning foolproof before taking the plunge.
Although almost half of all farm businesses in the UK are supplementing income through non-farming enterprises, Tim Porter, Agriculture Director, Lloyds TSB Business Banking, is warning that diversification isn't for everyone.
Launching Lloyds TSB Agriculture's latest 'Guide to Farm Business Diversification', Mr Porter said:
"Sensible diversification can make all the difference to some farm businesses - releasing unused resources of land, buildings and entrepreneurial skills and helping develop a long-term source of alternative income.
"But it's not the solution for everyone. A project will often take a business operator into uncharted territory so levels of planning, budgetary forecasting and control need to be of the highest order.
"Additional training and professional help are of equal importance. The key is to plan all aspects in detail and subject every idea to the most critical examination of family, business partners, staff and professional advisors."
The new guide lists 75 different examples of new business opportunities that have been followed by UK farmers ranging from new crops and livestock enterprises to farm retailing, leisure and tourism and property development and management. Each example has a checklist of risks and rewards and sources of further expert and practical information.
"The range of diversification projects that can be carried out on farm is vast, limited only by the imagination and ambition of individual entrepreneurs. Our guide is designed to release that entrepreneurial drive but to temper it with enough caution to increase the chances of success," said Mr Porter.
According to Defra figures 48% of all farms manage a diversified activity, 39% rent buildings for non-farm use, 8% offer tourist accommodation, 7% process or retail farm produce, 3& offer sport and recreation facilities and 3% have another diversification.
The guide lists three main areas of new business opportunities being pursued on farms:
* On-farm, agricultural projects - moving into enterprises not previously provided by the business such as alternative crops, exotic livestock enterprises or contracting;
* On-farm, non-agricultural projects - using land-based resources to provide non-farm products or services such as tourism or retail;
* Off-farm diversification - making fuller use of non-land-based resources such as labour, capital and vehicles for activities ranging from other self-employed business ventures to full- or part-time employment.
