FARMERS income from diversification businesses has risen to 13% of turnover in 2023, research has revealed. 

A survey conducted by rural insurer NFU Mutual also shows that 34% of farmers now run a diversifed business, up 6% since 2018. 

The most popular diversification is renewable energy, such as solar power, wind turbines or anaerobic digesters. Property letting and holiday accomodation comes in at joint second, followed by livery/equestrian businesses, caravan/camping and farm shops. 

The survey also found the number of existing farms undertaking agricultural contracting was up 7% to 22%, with farmers looking to capitalise on their machinery and equipment.

English farmers have the highest proportion of diversification enterprises at 41%, followed by 38% of Welsh farmers and 27% of Scottish farmers. Only 15% of Northern Ireland farmers surveyed run diversification scheme.

The percentage of farmers considering a diversification scheme dropped to 15% (from 16% in 2022) and NFU Mutual believe this could be due to the tough economic climate. 

Same as in 2022, 37% of farmers expect returns from their diversifications to increase over the next five years. 

Chris Walsh, NFU Mutual farm specialist, said: “For many farmers supplementing the farming income is essential to ensure long-term sustainability – so we’re very pleased to see that well over a third of farmers running diversified businesses  expect their returns to increase.

“Farmers are putting great businesses in place which will help protect the long-term future of their farms. Many are also providing jobs, both for members of farming families and for local people as well, enabling the public to enjoy new aspects of our fantastic countryside – a win-win."

He explained that higher interest rates, rising prices and labour shortages mean farmers must plan costs before taking the plunge. 

“Given the challenges facing businesses in every sector, caution is prudent in the current economic climate," Chris added.

"To help farmers gauge the feasibility of their ideas – whether it’s for luxury glamping, an ice cream business, or letting out buildings for commercial or domestic use, we have a developed a Diversification Hub with a wealth of information.

“It’s important to recognise that diversification isn’t for every farm. If you haven’t got a suitable site, finance and the resource to run another business alongside your farm it may well not be for you.

"I know a good number of farmers who have looked at all the options to boost their farm incomes and have taken the view that their best option is to put all their energy and investing into developing farming activities.

“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 growers.”