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Diversification key as farmers look to bridge subsidy gap

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Written by: Andrew Merrell | Posted 04 December 2017 13:19

Diversification key as farmers look to bridge subsidy gap

Diversification will be crucial as farmers look to re-boot their business following the expected CAP overhaul post 2022, according to rural specialists at Bruton Knowles.

Ben Compton from the firm’s Gloucester headquarters told delegates at the Three Counties Farming Conference one possible solution to bridging the subsidy gap is through successful farm diversification -  but this would depend upon ‘unlocking the potential whilst managing the risk’.

The conference attracted a record number of delegates who were given insights on the environment, supporting innovation, improving productivity and investing in the next generation of young farmers.

Mr Compton said: “As things stand around 62 per cent of farmers in the UK have at least one form of diversification business, helping to generate some £580m.

“In the face of highly volatile farm incomes successful diversification could generate a greater proportion of farmers’ incomes.”

He said there were still opportunities out there for farmers to convert buildings for alternative uses such as holiday or commercial lets.

“Full planning will probably be needed to convert existing buildings to alternative uses, but planning rules have been relaxed and should be in favour of sustainable proposals.

“Some development could be permitted through Permitted Development Rights.”

Listed properties, or those in the Green Belt or in an Area of Outstanding Natural Beauty are likely to be more problematic.

Before setting out on any new venture, farmers should be looking at producing a current business overview and financial health check – before undertaking detailed market analysis of any chosen enterprise giving due consideration to competition and niche market areas.

“Financing conversion projects has always been a problem, but with 40 per cent Rural Development Programme for England grants currently available through the Leader or the Growth Programme, the direct costs can be reduced for certain types of project.”

He went on: “Farmers should be approaching lenders to obtain competitive offers bearing in mind their borrowing capability and sole trader, partnership or limited company status might be better for specific enterprises.”

“They should look particularly closely at location and proximity to their target market - and undertake a market appraisal with set objectives, targets and timelines to ensure success.”

“Current farm businesses should be stable and not too highly geared, and lastly but not least, farmers must have genuine passion and desire for any diversification project they undertake.

“As always, farmers are advised to take professional advice when looking at budgets, grant funding options, borrowing requirements, planning, marketing and the business plan.”

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