Almost 40% of Scottish farmers are now using their land for non-agricultural purposes amid concerns over the future viability of the sector, according to new research.
Rural insurer NFU Mutual surveyed 1652 farmers across the UK for its annual diversification report, and found the number of diversified businesses has grown from 31% in 2020 to 37% in 2021, with 39% of Scottish farmers now operating some alternative activity on their land compared to 43% in England and 34% in Wales. In Northern Ireland only 16% of farms surveyed have diversified.
The insurer’s report also reveals that 11% of the farmers surveyed who are get to diversify say they plan to do so in the next five years.
Renewable energy and tourism are the most popular diversifications, followed by equestrian, farm shops and caravan and camping sites, and the proportion of business turnover from non-farming activity has shot up from 11% in 2020 to 16% in 2021.
NFU Mutual farm specialist Chris Walsh attributed the growing trend to farmers’ concerns over the sustainability of agricultural businesses as support systems change and fears grow over the prospect of being undercut by imports of food from countries with lower standards.
“More farmers are seeing diversification as the best way to ensure the present generation on the farm is not the last,” he said.
“Renewable energy, property-letting and tourism are currently the most popular options. With the UK committed to reducing carbon emissions over coming years, a lot of farmers see harvesting power from the sun and wind as long-term investment winners.
“For others, particularly in coastal areas or near beauty spots, the rush for staycations during the Covid pandemic and the popularity of glamping is making tourism a very attractive proposition.”
Planning
Of those farmers who have no plans to diversify, 46% told the insurer they wanted to concentrate on farming and making the best use of land and skill sets, while 22% said they were too old to start a new venture.
The report emphasises the importance of planning in order to identify successful diversification opportunities and looking at the financial implications of setting up non-farming activities to avoid higher inheritance tax bills.