There are many ways in which farms can diversify - farmers should consider the time implications, financing, legal requirements and market conditions, building on their own skills and expertise to find the right opportunity for them. Having multiple income streams can help even out any seasonal peaks and lows in the business.
It is important to consider the impact of any diversification on the inheritance tax (IHT) treatment of land and buildings. For example, changing agricultural land and property to non-agricultural use can risk these assets no longer qualifying for Agricultural Property Relief (APR).
Here are some income ideas, along with ICAEW Library & Information service resources which can help you assist your agricultural client.
1. Alternative crops
Farmers can build on their growing expertise by diversifying into a wide range of non-food crops:
- Energy crops – for use in electricity, heat generation and/or biofuels
- Christmas trees and forestry - there are woodland support grants available to fund planting and managing trees
- Industrial fibre crops
- Speciality flowers – including edible flowers and garnishes
Maddocks Farm Organics in Devon has tapped into the trend for organic flowers in restaurant dishes and as wedding cake or cocktail decorations, supplying flowers to local restaurants as well as top chefs in London.
On a different scale, Sir James Dyson’s Beeswax Dyson Farming company runs two anaerobic digestion plants and grows 2,150ha of energy crops annually, which it says generates enough energy for 10,400 homes.
The government has published guidance for farmers on the business potential of producing crops for non-food markets, including details of organisations providing grants - Industrial energy and non-food crops: business opportunities for farmers.
The ICAEW Library has books in its collection on budgeting, costing and tax planning for alternative crops, including:
Books in the Library collection
To find out how you can borrow books from the Library please see our guide to borrowing books.
You can obtain copies of articles or extracts of books and reports through our document supply service.
2. Boarding Kennels, Catteries and Stables
Are there suitable outbuildings which could be converted into kennels, catteries or stables to gain extra income? Farms are likely to have plenty of space available for exercising dogs or horses.
Having stables opens up the possibility of running a riding school - some riding schools house horses at a reduced rate in return for permission to use the horses for riding lessons. A Riding Establishment Licence from the local council will be required. Some farms with stables have also diversified into ‘care farming’, offering therapeutic riding lessons to learners with special needs.
Farmers should weigh up local demand and competition and bear in mind that demand for cattery and boarding kennel services is inevitably seasonal.
Atom Content Marketing guides
The Start Up Donut guides from Atom Content Marketing provide practical information on starting up and running a number of small business types. Guides cover a range of areas including market research, regulations, pricing, revenue streams, costs and staffing. They include:
Business Focus
Croner-i Business Focus is a regularly updated online publication that provides detailed profiles of many key trades and business sectors, including boarding kennels and equestrian businesses.
Each business note includes information on the nature of the trade, performance indicators (such as profit margins), factors affecting trade, relevant accountancy and taxation issues, legislation and regulation, investigation matters and the VAT position. To find out more about Business Focus, please contact our enquiry team on +44 (0)20 7920 8620 or at library@icaew.com.
Industry guides
The ICAEW Library & Information Service has compiled a series of industry guides. The series aims to provide a package of information on each sector, including links to market research reports, statistics, trade bodies and trade journals.
The guides also provide details of key player reports, market reports and mailing lists which ICAEW members and ACA students can order through the website or by contacting our enquiry team. A guide is available for the Equine industry:
3. Events and experiences
The ‘experience economy’ has grown in recent years, with the British public now increasingly interested in spending their money on entertainment and events rather than material objects, 2018 research by Barclaycard shows. The majority of consumers surveyed by Barclaycard (66%) also said they respond positively to brands who ‘surprise and delight’ them with unexpected experiences or offers.
Farmers could showcase their own skills by running demonstrations of heritage farm crafts such as sheep shearing or wool spinning, or work with outside experts to provide a venue for rural craft themed workshops as diverse as scything, hedge-laying, wild foraging, skep making or spoon carving.
The Farmers Weekly 2018 Diversification Farmers of the Year winners, farming brothers Charlie and Will Moreton, have taken advantage of the rising demand for rural-located leisure activities by creating the ‘Wolf Run’, a 10k wild running event on their farm. Since starting out in 2011 the business now employs several staff and has expanded into offering shorter 5km & Junior courses and themed running merchandise.
4. Farm shops
Many farmers have diversified by starting a farm shop business. Government Farm accounts in England 2022/23 statistics found that around 6,200 farms engaged in processing/retailing of farm produce, with the average enterprise income from these activities during 2022/23 being £17,900 per farm (see Chapter 5: Diversification).
Farmers can add value by producing speciality products for consumers, such as cheeses, smoked-food, yogurt, ice-creams or cakes. Selling directly to consumers through a website, farm shop or market stall, or to local businesses like butchers, pubs and restaurants, can cut out third party costs. Local councils can advise on meeting relevant health and safety and food hygiene regulations.
Atom Content Marketing guides
The Start Up Donut guides from Atom Content Marketing provide practical information on starting up and running a number of small business types. Guides cover a range of areas including market research, regulations, pricing, revenue streams, costs and staffing. They include:
Online articles
The Library provides access to leading business, finance and management journals. These journals are available to logged-in ICAEW members, ACA students and other entitled users subject to suppliers' terms of use.
External resources
ICAEW accepts no responsibility for the content on any site to which a hypertext link from this site exists. The links are provided ‘as is’ with no warranty, express or implied, for the information provided within them. Please see the full copyright and disclaimer notice.
5. Farm tours
VisitEngland’s 2022 Full Trends Report shows that farm attractions have recorded the largest increase in visitor admissions since 1989, with growth accelerated over the last fifteen years. The Full Trends report provides figures for average farm attraction adult admission charges and revenue.
The Access to Farms (ATF) website has resources and a wide variety of case studies for farmers interested in offering educational farm tours for schoolchildren. ATF offers a Countryside Education Visits Accreditation Scheme (CEVAS) for farmers who would like to host visits from schoolchildren.
External resources
ICAEW accepts no responsibility for the content on any site to which a hypertext link from this site exists. The links are provided ‘as is’ with no warranty, express or implied, for the information provided within them. Please see the full copyright and disclaimer notice.
6. Microbreweries and distilleries
Beer has been booming in the UK; although start-up growth has been slowing, the total number of breweries still rose to 2,426 in 2021/22, according to research by UHY Hacker Young.
Microbreweries may be eligible for the new Small Producer Relief being introduced in August 2023, which applies to products with an alcohol by volume (ABV) of less than 8.5%. However, industry margins are tight and competition is fierce – a new beer brand must be distinctive.
Demand for craft spirits with innovative flavours continues to increase, with UHY Hacker Young reporting a 29% rise in the number of UK distillery businesses during the Covid-19 pandemic, reaching 351 in 2020. This is being fuelled by niche gins and the shift towards smaller 'local brands'.
Industry guides
The ICAEW Library & Information Service has compiled a series of industry guides. The series aims to provide a package of information on each sector, including links to market research reports, statistics, trade bodies and trade journals.
The guides also provide details of key player reports, market reports and mailing lists which ICAEW members and ACA students can order through the website or by contacting our enquiry team.
Industry reports
Online industry profiles and reports, available for Farming & Rural Business Community members, give an overview of market size, competitive landscape and provide a forecast of market performance. Access to reports is provided subject to suppliers’ terms of use.
Company profiles and market reports are available for a number of drinks companies and markets, including:
Industry reports
eBooks
The Library provides full text access to a selection of key business and reference eBooks from leading publishers. eBooks are available to logged-in ICAEW members, ACA students and other entitled users. If you are unable to access an eBook, please see our Help and support advice or contact library@icaew.com.
Terms of use: You are permitted to access, download, copy, or print out content from eBooks for your own research or study only, subject to the terms of use set by our suppliers and any restrictions imposed by individual publishers. Please see individual supplier pages for full terms of use.
Online articles
The Library provides access to leading business, finance and management journals. These journals are available to logged-in ICAEW members, ACA students and other entitled users subject to suppliers' terms of use.
Trade press articles
7. Self-storage
A new opportunity for farmers – converting farm buildings into self-storage containers. The market is a fairly local one, as the Self-Storage Association UK’s Annual Industry Report 2023 found that 62% of self-storage users travel fifteen minutes or less to their unit. The rising cost of fuel and inflation could further influence customers to use storage close to their home or business.
Farmers will need to fully consider the tax implications and gain planning permission if changing land from agricultural use.
MarketLine reports
Online industry profiles and reports from MarketLine (formerly Datamonitor), available for Farming & Rural Business Community members, give an overview of market size, competitive landscape and provide a forecast of market performance. Access to reports is provided subject to suppliers’ terms of use.
Company profiles are available for self-storage companies, including:
MarketLine reports
External resources
ICAEW accepts no responsibility for the content on any site to which a hypertext link from this site exists. The links are provided ‘as is’ with no warranty, express or implied, for the information provided within them. Please see the full copyright and disclaimer notice.
8. Tourist accommodation
Accommodation options include providing bed & breakfast, campsite or holiday cottage rentals. Farmers may have suitable fields which could be provided for campers or outbuildings that can be converted into cottages. Government Farm accounts in England 2022/23 statistics show that the most profitable form of diversified activity was letting buildings for non-farming use, with an average enterprise income of £23,600. Similarly, tourist accommodation and catering was the third most profitable diversified activity, with an average enterprise income of £16,100 (Chapter 5: Diversification).
There is a large domestic market for camping and caravanning holidays. Farms can be appealing places to stay for holidaymakers who enjoy immersing themselves in rural scenery. There will be opportunities to sell on farm produce to these visitors, for instance hungry campers looking to buy eggs and bacon.
Farmers will need to ensure they gain local authority licensing and planning permission and meet minimum legal facility standards. They should also research local demand as the sector is very competitive, with growing competition from Airbnb hosts.
VisitBritain has published 2019 data on potential activities most of interest to tourists (Interest in holiday activities in Britain, IPSOS 2019). Findings were based on the views of respondents from 17 global markets, including Brazil, China, India, Poland, Spain, Sweden and the USA. The research found the most popular activities were those that involved exploring England at a leisurely pace, with over half of respondents saying they would like to 'Drive though the countryside of England' and 'Take a canal boat tour through the waterways of England'.
To attract these visitors, try providing online booking facilities and flexible rooms and spaces for extended families or singles. Promotional marketing should highlight any day trips available in the local area.
The ICAEW Library has books in its collection on costings/taxation of farm and holiday accommodation, including:
Books in the Library
To find out how you can borrow books from the Library please see our guide to borrowing books.
You can obtain copies of articles or extracts of books and reports through our document supply service.
External resources
ICAEW accepts no responsibility for the content on any site to which a hypertext link from this site exists. The links are provided ‘as is’ with no warranty, express or implied, for the information provided within them. Please see the full copyright and disclaimer notice.
9. Vineyards
Wine production is bubbling up - the top producers of English wine (based on eight that disclose turnover in their accounts) have seen their turnover increase by another 4.5%, from £24.3m in 2019/20 to £25.4m in 2020/21, as reported by UHY Hacker Young. The hotter temperatures which have become more common in UK summers recently have led to higher quality wines being produced here. Still, farmers must bear in mind that the crop can be easily damaged by unexpected frosts such as those seen in April 2017.
Vineyards also offer further spin-off opportunities for tasting events and experience tours.
Industry guides
The ICAEW Library & Information Service has compiled a series of industry guides. The series aims to provide a package of information on each sector, including links to market research reports, statistics, trade bodies and trade journals.
The guides also provide details of key player reports, market reports and mailing lists which ICAEW members and ACA students can order through the website or by contacting our enquiry team.
Industry reports
Online industry profiles and reports, available for Farming & Rural Business Community members, give an overview of market size, competitive landscape and provide a forecast of market performance. Access to reports is provided subject to suppliers’ terms of use.
Company profiles and market reports are available for a number of wine companies and markets, including:
Books in the ICAEW Library collection
The ICAEW Library has books in its collection covering costings/taxation of vineyards, including:
To find out how you can borrow books from the Library please see our guide to borrowing books.
You can obtain copies of articles or extracts of books and reports through our document supply service.
10. Worm Farms
An alternative livestock option! Worms can be reared for compost or fishing bait, to be sold on to individuals or business customers such as fishing shops, pet shops or garden centres. Land will need to be given over to worm beds and suitable manure and foodstuffs provided for the worms. Harvesting, cleaning, packing and shipping the worms must also be considered. Another potential product is vermicompost, a natural compost produced using worms.
Once established, worm farmers can go on to offer consultancy to others considering starting up a commercial worm farm. Alternatively farmers can run short experience courses for members of the public who want to learn how to look after their garden wormery.
Online articles
The Library provides access to leading business, finance and management journals. These journals are available to logged-in ICAEW members, ACA students and other entitled users subject to suppliers' terms of use.
More resources
Business Focus Online
The ICAEW Library & Information Service has access to Business Focus, a comprehensive business information service from Croner-i. It contains performance indicators, start-up information, relevant legislation, accountancy and investigation matters, VAT position and economic reviews for the agricultural sector, covering: arable farms, beef farms, dairy farms, horticulture, mixed farms, pig farms, poultry farms, sheep farms and farm suppliers.
Each sector profile contains the following:
- Executive summary
- Sector overview
- Nature of the trade
- Start-up
- Legislation and regulation
- Performance indicators
- Investigation matters
- Accountancy matters
- VAT position
- Statistics
- Further information
The profiles are regularly updated every couple of months to provide valuable market intelligence, guidance on best practice and information on start up costs, regulation and grant aid. They can be used to assist your client with starting up a new business or to compare industry standard performance indicators against existing businesses your clients have established.
Extracts can be emailed to ICAEW members and ACA students (subject to copyright restrictions). Contact us by phone on +44 (0)20 7920 8620, by web chat or by email at library@icaew.com for help or more information.
Industry guides
The ICAEW Library & Information Service has compiled a series of industry guides for ICAEW members and ACA students. The series aims to provide a package of information on each sector, including links to market research reports, statistics, trade bodies and trade journals.
Bloomsbury Accounting and Tax Service
Eligible firms have free access to Bloomsbury Professional's comprehensive online library, comprising around 80 titles from some of the country's leading tax and accounting subject matter experts. Find out who is eligible and how you can access the Bloomsbury Accounting and Tax Service.
You are permitted to access, download, copy, or print out content from eBooks for your own research or study only, subject to the Acceptable usage terms.
Online articles
The Library provides access to leading business, finance and management journals. These journals are available to logged-in ICAEW members, ACA students and other entitled users subject to suppliers' terms of use.
Online articles
Useful links
ICAEW accepts no responsibility for the content on any site to which a hypertext link from this site exists. The links are provided ‘as is’ with no warranty, express or implied, for the information provided within them. Please see the full copyright and disclaimer notice.
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