A new survey shows that 1 in 3 farmers are planning to diversify over the next five years - and nearly three quarters of them believe renewables offer them a bright future.

Insurer NFU Mutual's annual diversification survey shows that 37 per cent of UK farmers plan to increase diversification over the next five years, up 3 per cent from last year.

However, the research also showed that farmers have held back on diversification this year as they wait for details of farm support systems and assess the implications of the cost-of-living crisis.

A further poll by the insurer shows that nearly half (46 per cent) are currently diversifying to boost farm incomes, with safeguarding their farm’s future the second most common reason (29 per cent). 

Research carried out with over 1,650 farmers across the UK earlier this year found that income from diversification represented 12 per cent of a farm business’ total income (down from 16 per cent in 2021). Whilst a post-lockdown staycation boom supported income from agri-tourism, a rise in farm output prices pushed overall farm income above the previous year’s figure. 

Against a background of uncertainty over new farm payments and more recently an expected new direct support scheme, 11 per cent of farmers yet to diversify say they now plan to do so in the next five years.

Future farm diversification plans are also being radically changed by the energy crisis. Seven in ten respondents (72 per cent) believe that renewables are now the enterprise most likely to be successful in the future.

In 2022, holiday accommodation – camping, glamping, caravan sites, B&B and holiday cottages -  were the most popular diversifications developed by farmers, NFU Mutual’s research shows. In joint second place was renewable energy together with non-holiday property letting.

Pete Randerson, NFU Mutual agent for Tiverton, said: “For many farmers diversification is now essential to keep a decent income flowing into their business with high input costs seriously affecting profitability in every sector of agriculture and horticulture.

“Today farm diversification is a sophisticated sector of the rural economy, providing significant income and employment opportunities in the countryside. It also gives the public the opportunity to visit the heart of our spectacular countryside and enjoy our excellent food straight from the grower.

“Farmers’ renewable energy schemes are providing an increasing amount of the nation’s power, reducing reliance on fossil fuels and helping us towards the net carbon zero goal.

“We’re not surprised to see that some farmers have put a hold on their plans while waiting for more details of an expected new government farm support scheme. For new ventures involving the public, such as holiday accommodation, food processing and retailing, it’s now vital to assess the likely impact of the cost-of-living crisis on public spending."