Over a quarter of Scotland farmers plan to diversify to survive after Brexit, a NFU Mutual report has revealed.

The in-depth analysis showed that:

  • More than a quarter of Scotland’s farmers plan to diversify to make farms sustainable after Brexit
  • More than 94% of existing farm diversification schemes are successful
  • There were opportunities and challenges for Scottish farmers considering diversifying

Of the main conclusion, that more than 27% planned to diversify in to other enterprises to support their farm business after Brexit, the leading rural insurer’s report gives information on latest trends, together with expert insight and analysis to help farmers make decisions on the future direction of their farm businesses after Brexit.

NFU Mutual surveyed farmers with established diversification businesses to gain insight into their experiences, as well as farmers currently solely involved in farming activities to understand their attitudes and plans for future diversification.

From currently diversified farms, the research found that from the 62%* of UK farmers who have already diversified their businesses, nine out of 10 schemes (94%) had been financially successful.

The important role diversification plays in the sustainability of many farms was demonstrated with nearly two thirds (63%) reporting that the income produced by diversification was ‘vital’ or ‘significant’ to their farm. On average, diversified farms report that 27% of their income comes from their non-farming activities.

The most common diversification on Scottish farms was renewable energy (34%), followed by property letting (17%) and holiday accommodation (8.5%).

Not surprisingly, boosting farm income was the main reason for diversifying – quoted by 62% of farmers surveyed across the UK. Other reasons included: providing a business opportunity for a partner, or other family member (26%); utilising redundant farm buildings or unproductive land (20%); and providing a short-term income (9%).

While 89% of diversified farmers’ said their schemes had a positive effect on the farm business, respondents highlighted a number of challenges running an alternative enterprise alongside a farm. These included a lack of time (22%); red tape (18%); unreliable broadband (15%) and cash flow (15%).

Of those farmers who had already diversified, 27% said they were planning to further develop non-farming enterprises after Brexit.

A review of current, non-diversified farms, showed that 27% said they would probably, or definitely diversify in the future. However, just under half (45.5%) of non-diversified Scottish farms still believe farming provided the best potential for their holding.

Other reasons for not planning to diversify included lack of access to finance, no interest amongst family members and poor broadband.

Across the UK, top choices for farmers now planning to diversify were: caravan/camping sites (27%); other holiday accommodation (20%); and renewable energy (20%). Encouragingly for the rural economy, 80% of farmers planning to diversify expected their schemes to create between one and two permanent jobs.

NFU Mutual was concerned that less than a third of diversified farms surveyed have taken Inheritance Tax implications into account in new business plans. It recommended that farmers planning diversification seek expert financial advice.

As an organisation strongly supporting initiatives to promote mental well-being in farming families, NFU Mutual also looked at rural isolation issues. Almost half (40%) of Scottish farmers surveyed thought a diversification project would make them feel less isolated than working as a farmer in an era when most work alone for long periods.

In the report foreword, Jim McLaren, a NFU Mutual board member and former president of NFU Scotland, said: “One of the major challenges for farmers is to find ways to generate extra income streams to keep farms sustainable. With declining direct support for many farms on the horizon it’s essential to examine the opportunities available from diversified income streams.”

Chris Walsh, the Mutual’s farm insurance manager, added: “Scotland’s farmers are currently facing the greatest challenge to their future for generations, so we are working hard to help them make informed choices about the best route for their farms and families.

“Farmers are incredibly resourceful, but for many farmers, setting up a non-farming business is a step into the unknown, so our report sets out clear information on the opportunities and challenges of diversification, together with insight from existing diversifiers and industry leaders.

NFU Mutual has wide expertise providing insurance for farming and a wide range of diversification schemes. Involving insurers at an early stage means many risk can be designed out, keeping insurance premiums low when the project is up and running,” he added.

• There is a series of videos and podcasts to help farmers considering diversification decide on how to proceed. They’re to download on NFU Mutual’s website: www.nfumutual.co.uk/farming/farming-diversification.