How to run a successful farm diversification

How to run a successful farm diversification

Farm diversification projects can be extremely hard to get up and running as well as be profitable and successful. This article looks at different farm diversification projects and how they have made a success of what they’ve done.

Diversifying into non-farming farm diversification business ventures is now almost an essential for farmers who want to secure their financial survival.

At Farmers Weekly’s second diversification event in Cumbria farmers who have done just that explained how they went about setting up additional income streams.

Find out what kind of enterprises they set up and advice on how they did it successfully.

Visitors centre

Event hosts Isaac and Kerrie Benson had a window of just 12 months in which to build their Lakeland Visitor Centre as they put in for planning permission.

During that 12-month period, they also had to lamb 900 ewes and calve 100 cows.

The centre is a farm experience based on an auction-ring setting for safe livestock handling and demonstration.

There are also dry stone walling demos and classes alongside wool spinning and craft classes.

They found getting planning permission was more straightforward than they had imagined, but once they started the building work it became a bit more complicated.

“We uncovered a view that we thought we must preserve, so we had to go back and request a change to the planning permission to achieve that,” said Mr Benson.

This major design change meant that the window was reduced to five months for the actual construction and fitting-out work.

Everything was sourced from within Cumbria, which added cost and time, but also lent the authenticity they were looking for and helped support the local economy.

Footfall

Contrary to what they had expected and despite Cumbria’s huge visitor numbers, footfall at the centre and in the shop and café is about 90% local.

Mr Benson had some initial reservations about showing live animals to schoolchildren and making the link with food on the plate. However, his opening line of “Who likes McDonald’s?” seemed to kick things off fine.

He had some advice about the challenges of working with the public.

“Work out who is best at that – Kerrie is better at problem solving than me – if I get left to my own devices, it usually ends up on TripAdvisor or somewhere like that. Kerrie is more diplomatic.”

Top tips from Isaac and Kerrie Benson

Be on site as much as you can – particularly during construction, as issues always arise that need quick decisions, but also once the venture is operational

Marketing – be wary of spending a lot of money with “experts” – your customers and social media are your best marketing tools

Look forward – it takes courage and the changes that are happening in farming can make you quite negative

Time – The Bensons have had one day off in the past seven months and that was Christmas Day

Identify who is best in customer-facing roles, particularly regarding handling complaints

Caravan site

Rural surveyor John Welbank turned farmer in 2012, buying a fairly run-down 31ha livestock holding with a small caravan site.

Using his experience of advising other farmers on farm diversification ventures, he and his wife, Sylvia, have spent the past seven years transforming Ireby Green Farm, near Kirkby Lonsdale, Cumbria.

The farm now receives more than 30,000 visitors a year to its café, farm shop, plant nursery and 40-pitch seasonal caravan site.

More than 20 staff are employed year-round.

Conversions are more likely to get planning permission than new builds but can be expensive because you never know what you’re going to find once you start work, advises Mr Welbank.

“New builds are cheaper, easier and quicker – our timber-framed café building went up in 48 hours.

“It took another four months to fit out.”

Although the farm is outside the National Park, it can be seen from the park so the local authority’s policies take that into account.

John Welbank’s farm diversification advice

Fitting-out costs, especially those associated with food preparation, can be huge, especially if stainless steel is involved

Know your market. “Eighty percent of our trade is local. The older generation is our main market.”

Staffing. “Don’t underestimate the challenges – this is a constant worry. We really struggle to recruit and retain staff, and Brexit and Ms Patel in the Home Office are not helping.”

Pricing and margin. “It’s crucial to get these right. It’s no good having the best café with fantastic food that customers love, but no margin. Cost everything and know what each plate of food and each piece of cake costs.”

Marketing. “We’ve spent next to nothing on this – word of mouth is by far our best form of marketing. Social media is secondary and we do that ourselves.”

Grants. “We’re confident there will be new grant funding, we just don’t know when yet. So for the best chance of grant success, if you’re planning a big scheme that is reliant on funding, work up your business plans and get your planning permission in place.

“Many depend on planning being in place and you don’t want to be chasing both planning and a grant application at the same time.”

Keep smiling – customers like it.

Meat, wool, soap and holidays

John Atkinson’s family has been farming in Cumbria for 600 years.

However, Mr Atkinson has also worked outside the farm, in film and for the National Trust for many years.

He believes it’s important for farmers to get off the farm to make links and to get ideas.

Advertisement

As well as running his own Nibthwaite Grange Farm, Mr Atkinson also manages conservation grazing for organisations who don’t want to manage directly the land they have bought or control.

He and Maria Benjamin, who is from an arts background, have developed several strands to their business.

“We didn’t have a lot of cash for investment, so rather than going to the bank, we said let’s see if we can increase profits.”

Their four strands are:

Accommodation

This is on three National Trust sites – a barn, an off-grid cottage and basic camping.

The camping venture helps them control who is coming on to the site as they graze the land around it.

They considered glamping but dismissed it at the prospect of changing sheets in posh tents.

Instead, they boosted the image of what they already have with a “back to nature, technology detox” brand that gets repeat business.

Most of their customers are from London and want to get away.

The barn was converted with the help of Leader funding (a pain, says Ms Benjamin) to holiday accommodation and an area where Ms Benjamin makes soap from Jersey milk.

Wool

Farm Diversification

Their wool business, Shear Delight, is growing as the specialist single breed, single farm market develops.

Their rare breed wool is exported to Japan and sold online.

Meat

Conventional lamb is sold through the auction market but most of the rare breeds go to butchers and restaurants.

“The meat flavour is different so it’s good for restaurants. It’s a question of picking your market,” said Ms Benjamin.

“You can do boxes, but it can be stressful if the box doesn’t turn up.

“I think it’s more important that people just buy from local butchers – we sell quite lot to local butchers and that has a good response – people want to buy specifically from us.”

Mr Atkinson and Ms Benjamin get three cash incomes from their sheep – meat, wool and skins, with rare-bred sheepskins worth considerably more than mass-market breeds.

Soap

This is made with milk from Ms Benjamin’s Jersey cows and sold 50% wholesale, 37.5% online and at a few Christmas markets, at Tebay services and a few National Trust shops.

In its third year, this strand is growing, has a quick turnround, is more labour intensive but has a good cashflow.

“Each strand is profitable,” said Ms Benjamin.

“We look at what gives us most profit from the least effort.

“If we had stuck to that policy, we would just have done accommodation, but it’s better to find something you like.

“If you like talking to people all day, fine, but think carefully about it.

“We very rarely see the people that are staying with us, it doesn’t impact on our other businesses.”

A questionnaire on why people buy from Mr Atkinson and Ms Benjamin revealed that provenance and the assurance that everything is produced on farm engendered trust.

Grants and other help

Veronica Waller is senior project manager for Cumbria’s Farmer Network, which helps farmers with a wide range of business services, including training, grant applications, workshops and fuel buying.

She stressed the importance of a good business plan rather than focusing on grant availability.

“The most important thing is what suits your business – think carefully and do your market research,” she advised those considering farm diversification.

“The question should not be ‘what is there grant funding for’ but what skills are there in the family, what does my business have to offer and is there a market for what I want to produce.”

Consider other routes for business help

Many farmers would not see their local chamber of commerce as an obvious source of business advice. However, Cumbria Chamber of Commerce has a business growth fund that helps businesses of all types to start up and grow.

It also offers business grants of up to £50,000 (40% of a project) and helps with applications for these.

Deputy chief executive Suzanne Caldwell also explained that other business help included cashflow and borrowing advice.

“We have a really simple subsidy scheme – businesses can apply for up to £4,000 to work with a marketing consultant or someone to help with planning, or a combination or any sort of consultant they need to make a project work.

“It takes about an hour-and-a-half to apply and we pay the consultants direct. It’s very simple and straightforward.”

A family business placement scheme also facilitates visits between businesses doing similar or completely different things.

Motorway services empire

John Dunning and his wife first diversified into holiday accommodation.

In the early 1970s they took a huge leap in opening a northbound motorway services on the M6, which newly ran through their land.

“We were successful but aware that we didn’t have all the skills. We weren’t caterers and we weren’t retailers, but found a partner in a local bakery,” says Mr Dunning.

It was a demanding project, although planning permission was not a problem at that time.

With a farm and a bakery behind the two main businesses, there was not the pressing need to take income out of the services in the first years, so everything ploughed back.

Following the service area, a truck-stop was built, then a motel in 1987, and with M6 traffic heavier than originally predicted, the business grew at about 3% a year.

Since then, the family, which still farms, has developed a southbound M6 services, Gloucester services, the M6 junction 38 truck services, Cairn Lodge services south of Glasgow, and the Rheged Centre, offering arts, food and shopping.

Food business

Mr Dunning stressed the importance of the heritage and provenance of the meat and other products offered in the Westmorland family business service stations, which now number four.

His two daughters, Jane Lane and Sarah Dunning, are the shareholders in the business.

“We see ourselves as a food business that happens to be situated on a motorway,” said Mrs Lane.

“We give travellers a snapshot of the land they are travelling through.

“Our roots remain embedded in the family farm – we use local suppliers and work with them to produce products. Their success is our success.”

The business has grown to welcome 10 million people a year and employs 1,300 staff.

It also helps suppliers with some aspects of people management and logistics for which a small business could often find it difficult to find the resources, said Mrs Lane.

Success

Business success is identified under several headings – commercial, customer, colleague and community.

People like to feel connected with a place, said Mrs Lane.

“Customer success for us is focusing on that cause [of identifying people with place] and giving our customers a great experience, never losing sight that what were there to enable that experience.

“Customer satisfaction and feedback is monitored through Google review and TripAdvisor.

“Colleague success is doing our best for each other, doing jobs willingly and well, valuing each other and our teams.

How to plan a farm diversification

Getting a market review and appraising the options before starting to build a business case can save time and money, said Emma Winter, planning associate with Carter Jonas.

Assessing the market includes population trends and a demographic analysis of the residential market around your site, a review of tourism levels nationally, regionally and locally, as well as assessing the competition.

Her planning tips include:

Anything that constitutes development under the Town and Country Planning Act needs planning permission and this may not necessarily be a physical change to a building or erecting a new building – it could simply be a change of use, which can be more of an issue than the physical construction of or changes to a building.

Full planning permission is not always needed – permitted development may cover your project but could require needs prior approval from the local authority. There are also some important restrictions in that permitted development rights (PDRs) may not be used in certain designations such as an Area of Outstanding Natural Beauty, a World Heritage Site or a National Park.

Class Q PDRs allow change of use from agricultural to up to five residential units for both traditional and modern agricultural buildings. Prior approval may be needed for transport, highways, noise impacts, contamination risks to the site, flooding risks, location, siting, design and external appearance.

Where full planning is needed, check how your plan fits with national policy under the National Planning Policy Forum (NPPF) and local planning policy (the local plan). There will be short- and long-term considerations – become familiar with these especially what are known as material planning considerations, such as noise, infrastructure capacity, effects on listed buildings and conservation areas, also highways issues.

Check the planning history for the site and adjacent or nearby sites.

If there is no policy support at present for your plan, it may be possible to promote it through an emerging local plan.

Quality preparation and accuracy of design is important – professional help is not necessarily huge and expensive, but employ an architect. Design is one of most important aspects, and a good design will mediate between policy and ambition.

Technical consultants may be needed for aspects such as flood risk, drainage, highways, landscape and noise.

Your application should have a technically competent and effective planning statement to persuade the authority that it complies with local policies.

Ensure drawings are to the correct scale.

Have pre-application discussion with the local authority to get feedback.

Undertake community consultation.

If the project is significant in scale, engage with local politicians.

Check the validation requirements – often applications are rejected simply because they don’t include sufficient information.

Listen to consultees, build relationships, look at consultation responses, don’t be disheartened if amendments are needed.

Seek early discussion on any planning conditions that may be applied.

Here at Agriculture Marketing Agency with offer help and guidance when setting up farm diversification. Including a FREE initial marketing consultation to set up a plan of attack for the direction you want to target for your business.