Farm Diversification 2016

The Business of Farm DiversiďŹ ca4on BML313: Rural Tourism

Learning Outcomes Aims § To assess pressures facing the farming industry, and encouraging

farmers to diversify § To cri6que key areas of farm diversifica6on ac6vity and the factors

influencing engagement § To evaluate the opportuni6es and challenges facing farm diversifica6on § To discuss key policy ini6a6ves suppor6ng farm diversifica6on at a local

and na6onal level

Farm Tourism and Farm Diversifica4on Ac4vity 1: •

What is farm diversifica6on?

Farm DiversiďŹ ca4on Bed and Breakfast Self-catering Camping/Caravan Sites

Activity Holidays

Fuel Timber Amenity/Recreation Wildlife/Conservation

[Source: Ilbery, 1992]

Farmhouse Teas/Cafe Demonstrations Opendays Farm Attractions Horseyculture

Leasing of Land Leasing of Buildings

For other Farmers For Non-agricultural organisation

PYO Schemes Farm Gates Sales Farm Shop Delivery Round

Linseed Teasels Evening Primrose Fennel

Wool Skins Hides

Cheese Ice Cream/Yoghurt Flour Milling Jams/Preserves

Sheep Meat Fish Deer Goats

Structural DiversiďŹ ca4on Tredethick Farm, Lostwithiel

Structural DiversiďŹ ca4on

Quay Quarters, Chichester

Structural DiversiďŹ ca4on Pennywell Farm, Devon

Structural DiversiďŹ ca4on

Dairyland, Cornwall

Fishers Farm, West Sussex

Structural DiversiďŹ ca4on

Adding Value

Educa4on

Farm DiversiďŹ ca4on Bed and Breakfast Self-catering Camping/Caravan Sites

Activity Holidays

Fuel Timber Amenity/Recreation Wildlife/Conservation

[Source: Ilbery, 1992]

Farmhouse Teas/Cafe Demonstrations Opendays Farm Attractions Horseyculture

Leasing of Land Leasing of Buildings

For other Farmers For Non-agricultural organisation

PYO Schemes Farm Gates Sales Farm Shop Delivery Round

Linseed Teasels Evening Primrose Fennel

Wool Skins Hides

Cheese Ice Cream/Yoghurt Flour Milling Jams/Preserves

Sheep Meat Fish Deer Goats

Visitor ABrac4ons Trends

[Visit England, 2016]

The Farm Tourism Market Key Facts: § Visitors are socio-economic group

AB, age group 35-44, travel with wife/spouse and children

§ Visitors staying at self-catering

accommoda6on, have similar characteris6cs, though with a larger propor6on of families

[Morrison, 2002]

Farm Diversifica4on: Key Sta4s4cs Farm Business Survey 2014/2015 § 61% had some form of diversified ac.vity (+3% on 2013/2014); 41%

that have diversified into businesses other than leHng buildings

§ Income from diversifica6on was £530m (£490m in 2013/2014; £450m

in 2012/2013)

§ For 38% of businesses with diversifica6on ac6vity, diversifica6on

accounted for 25% of total farm income

§ 24% of diversified farms derive more income from their diversified

business than from farming

§ Larger farms are more likely to diversify than smaller ones

in each of these regions was agricultural contracting and haulage. M activity are shown in tables 7 and 8 and an accompanying workbook w our website at https://www.gov.uk/government/organisations/de affairs/series/structure-of-the-agricultural-industry.

Farm Diversifica4on: Key Sta4s4cs § Holdings with tourism as a

Figure 1: Holdings with tourism as a proportion of all diversifying holdin

propor6on of all diversifying holdings by English region

Tourism in leisure act proportion diversified The lowes Humber, E where the These regi diversifyin haulage a figures a workbook

5

Farm DiversiďŹ ca4on: Key Sta4s4cs

[Source: Farm Business Survey 2014/2015]

Diversifica4on: Defini.ons

Farm Diversifica4on: A Defini4on of Terms DEFRA (2007):

‘Any ac6vity, excluding mainstream agriculture and external employment by members of the farm family, which makes use of farm assets to generate addi6onal income’

Farm Diversifica4on: A Defini4on of Terms ‘Farm Diversifica4on’ / ‘Alterna4ve Farm Enterprises’ § Focus: § Capital and land § ‘Unconven6onality’ compared to tradi6onal agricultural

ac6vi6es

§ Produc6on of alterna6ve food and fibre products § Re-establishment of on-farm product processing § Provision of accommoda6on and recrea6on

Farm Diversifica4on: A Defini4on of Terms ‘Farm Diversifica4on’ / ‘Alterna4ve Farm Enterprises’ § Focus:

Limita4ons:

§ ‘Unconven6onality’ compared to tradi6onal agricultural • Analysis restricted to farmac6vi6es centered ac6vi6es capable of genera6ng income § Produc6on of alterna6ve food and fibre products

• Exclusion of off-farm ac6vi6es § Re-establishment of on-farm product processing to preserve the image of § Provision of accommoda6on and recrea6on professional full-6me farming

§ Capital and land

Farm Diversifica4on: A Defini4on of Terms ‘Part-Time Farming’ § Focus: § Labour § Considera6on to the u6lisa6on of farm labour resources beyond

the farm gate

§ ‘the combina6on of farming with other paid work’ (Gasson, 1988)

Farm Diversifica4on: A Defini4on of Terms ‘Pluriac4vity’ § Focus: § Integrated/holis6c approach recognising farm-centered

diversifica6on and off-farm part-6me farming

§ ‘the phenomenon of farming in conjunc6on with another gainful

ac6vity, whether on- or off-far’ (MacKinnon, 1991)

§ Afen6on given to all aspects of agricultural and non-farm work

undertaken

§ Recogni6on that agriculture is not necessarily the main

employment ac6vity thereby drawing afen6on to the impact of rural policy ini6a6ves upon the farm business

Factors Influencing Farm Diversifica4on

Factors Influencing Farm Diversifica4on

External

Internal

Farm Diversification

Factors Influencing Diversifica4on External: § Policy frameworks (ERDP/RDPE) § Poli6cal, financial and planning environments § Agency involvement § The success of other farmers’ ac6vi6es (champions) § The local environment § Changing nature of rural popula6ons § Increasing emphasis on the conserva6on of the rural environment

Factors Influencing Diversifica4on Internal: § Mo6va6ons and aspira6ons of rural diversifiers § Characteris6cs of diversifiers: §

Age, educa6on, skills and experience

§ Enterprise characteris6cs §

Size, loca6on, capital availability, type

Barriers to Diversifica4on – DEFRA (2007) § Key challenges § The technical knowledge and skills required for the diversified

business were out of scope

§ New business skills are needed: market research, marke6ng,

business planning, business management and customer rela6ons § A lack of awareness of the need for business and management

training; 67% of farmers* had had no training in the enterprises they had set up

Barriers to Diversifica4on – DEFRA (2007) § Key challenges § Barriers to skills training: cost of training and lack of effec6ve

funding provision; access to appropriate training and not knowing where to find it; 6me away from the business; relevance of training; awareness of benefits

§ The lack of conceptualisa6on of ‘farming’ as a business § Farmers’ aHtudes to diversifica6on is variable; diversifica6on is

seen as a necessary evil, rather than a logical and beneficial business development

Barriers to Diversifica4on – DEFRA (2007) § Key challenges § 78% of farmers saw poor returns from farming as a key driver

compared to 8% who regarded it as a posi6ve desire to improve the farm business

Barriers to Diversifica4on DEFRA (2006) - The Effects of Public Funding on Farmers’ AUtudes to Farm Diversifica.on (based on a survey of 1,000 farmers) § Key challenges (current diversified enterprises) § Planning (32%), securing grants (29%), securing finance (18%)

and marke6ng (15%). § 27% thought the grant applica6on process should be made

easier to encourage diversifica6on

Barriers to Diversifica4on § Training (current diversified enterprises) § 31% of current enterprises had undertaken training, only 1%

received training on planning (technical training 55%, other regulatory/compliance 30%, business management 25%, marke6ng 17%)

§ Diversified enterprises not set up - reasons for not going ahead § 21% of poten6al enterprises stated planning issues as the most

important reason given for not pursuing a business; 37% failure to secure grant aid

Barriers to Diversifica4on § Non-diversified farmers considering diversifica.on § 23% stated sor6ng out planning constraints as a significant

issue/challenge

Factors Influencing Diversifica4on

Successful Farm DiversiďŹ ca4on

Farm Tourism and Farm Diversifica4on Ac4vity 2: •

What are the cri6cal success factors for farm diversifica6on projects?

Successful Farm Diversifica4on § DEFRA 2012 - Cri.cal Success Factors § Integra6on with exis6ng farm enterprises - the implica6ons on

your 6me, your core farm business ac6vi6es, cashflow, staffing, poten6al liabili6es

§ Market research - informa6on about skills, resources and

market condi6ons that you have gained from other local farmers who have diversified

§ Financial planning/cash flow projec6ons § Effec6ve marke6ng/USP § Planning and legal requirements, tax and na6onal insurance

issues

External Drivers: Policy Ini.a.ves

External:

External: Planning and Business Support

Farm Div ersificati A Plannin on g Guid

in Lewes

e for Farm ers District

External: Planning and Business Support

External: Sector Support

External: Sector Support

External: Sector Support

External: Sector Support

External: Sector Support

External: Sector Support

External: Sector Support

External: Sector Support

External: Sector Support

External: Sector Support

External: Sector Support

Farm Diversifica4on Policy Ini4a4ves: § Farm Diversifica6on Grant Scheme – 1988 to 1992 § England Rural Development Programme – 2000 to 2006 § Rural Development Programme for England – 2007 to 2013 § Rural Development Programme for England – 2014 to 2020

External: Farm Diversifica4on Grant Scheme Background: § A comprehensive package of assistance to farmers thinking of

diversifying into non-agricultural, profit-making ac6vi6es on their farms

§ Concerned with maintaining farmers’ incomes as support prices for

farm products were reduced and further supply control measures introduced

§ 1st January 1988 to Dec 1992

External: Farm DiversiďŹ ca4on Grant Scheme

Capital Grant

Marke4ng Grant

Feasibility Grant

External: Farm Diversifica4on Grant Scheme • To assist in the development of new business enterprises

Capital Grant

Marke4ng Grant

Feasibility Grant

• 25% on investments between £750 and £35,000

External: Farm Diversifica4on Grant Scheme

Capital Grant

Marke4ng Grant

Feasibility Grant

• 50% of the cost of a feasibility study up to a maximum of £3,000 for individuals and £10,000 for groups

External: Farm Diversifica4on Grant Scheme • Towards marke6ng and promo6onal ac6vi6es

Capital Grant

Marke4ng Grant

Feasibility Grant

• Paid in three consecu6ve years at 40%, 30% and 20% to a maximum of £3000 for individuals

External: Farm Diversifica4on Grant Scheme Areas of Uptake § Farm-based accommoda6on § Sport and recrea6onal facili6es § Farm-based educa6onal facili6es § Livery for horses § Direct marke6ng: pick your own § Processing of farm produce § Processing of 6mber products

External: Farm DiversiďŹ ca4on Grant Scheme

External: Farm Diversifica4on Grant Scheme Overview: 1988 to 1992: § 3,200 applica6ons were received § 2,443 approved and 1,396 completed § A total cost of £10.4 million § Applica6ons concentrated in the south-west and the urban fringe

around London and the south-east

§ The demise at the end of 1992 was a response to the success of the

scheme

§ Government retreated from diversifica6on placing greater emphasis

on the environmental aspects of agricultural policy

External: England Rural Development Programme 2000-2006 Key Areas: § Commitment to agri-environment schemes § Environmentally Sensi6ve Areas (ESAs) § Countryside Stewardship § Organic Farming Schemes § Farm Woodland Premium Scheme § Woodland Grant Scheme

External: ERDP 2000-2006 Key Areas: § Processing and Marke6ng Grant Scheme § The Rural Enterprise Scheme § Voca6onal training for people in farming and

forestry

§ An Energy Crops Scheme

External: ERDP 2000-2006 Processing and Marke.ng Grant Scheme § Project Objec.ves § Improve agricultural processing and marke6ng

infrastructure in England

§ Guide produc6on in line with foreseeable

market trends

§ Improve/ra6onalise marke6ng channels § Improve presenta6on and prepara6on of

products

§ Apply new technologies and innova6on

External: ERDP 2000-2006 Processing and Marke.ng Grant Scheme § Project Size and Funding § 30% of eligible project costs, subject to a

maximum of £1.2million for any one project; minimum size of project £70,000

External: ERDP 2000-2006 Processing and Marke.ng Grant Scheme § Outcomes § £46.6 million grant commitment between

2000-2006; 429 applica6ons - 250 approved

§ Assisted 150 projects, created and safeguarded

8,300 jobs and introduced 383 new products to the market

§ Voca6onal training for people in farming and

forestry

External: ERDP 2000-2006 Rural Enterprise Scheme § Assistance for projects to develop more sustainable

and diversified rural economies

§ Help farmers adapt to changing markets and develop

new business opportuni6es

External: ERDP 2000-2006 Rural Enterprise Scheme § Project Objec.ves § Farm relief and farm management services § Marke6ng of quality agricultural products § Basic services for rural economy and popula6on § Renova6on and development of villages and protec6on and

conserva6on of rural heritage

§ Diversifica6on of agricultural ac6vi6es to provide alterna6ve/

mul6ple incomes

§ Encouragement for tourist and crat ac6vi6es

External: ERDP 2000-2006 Rural Enterprise Scheme § Outcomes § Total budget of £145 million, assis6ng 3,034 projects, crea6ng

or safeguarding 14,500 jobs § Support to 1,200 diversified farm enterprises and the marke6ng

of 3,800 agricultural products

§ 25% (over 3,500) of agreements linked to encouragement for

tourist and crat ac6vi6es

External: ERDP 2000-2006 Voca.onal Training Scheme § Training that contributes to an improvement in

the occupa6onal skills of those involved in farming and forestry

§ Informa6on and communica6on technology § Business development and diversifica6on § Marke6ng § Conserva6on and the environment

External: ERDP 2000-2006 Voca.onal Training Scheme § Payments § 75% of eligible costs

§ Outcomes § Total grant commitment of £21.5 million; 1,261 applica6ons - 825

approved

§ Support to 156,000 training days, nearly 19,000 courses and

funded training leading to over 17,000 qualifica6ons

External: Rural Development Programme for England 2007-2013 § Budget of £3.9bn between 2007 and 2013 § The RDPE provides a wide range support for capital projects and

training for farmers, growers, foresters, food businesses and rural communi6es.

§ Regional delivery via Regional Implementa6on Plans § SEEDA awarded £27 million Leader funding distributed directly to

13 Local Ac6on Groups (LAG)

§ LAGs will receive delegated funding of between £1.6 million and

£2.6 million for the period 2008 to 2013

External: RDPE 2007-2013 § LAGs will decide where the share of the money goes - linking to

local priori6es. Each project can receive a grant of up to £50,000

§ The funding will cover a wide range of ac6vi6es such as farm

diversifica6on, tourism ac6vi6es, renewable energy projects and collabora6ng to develop new products and services

External: England Rural Development Programme 2014-2020 § Budget Alloca6on: § €2,900 million allocated for Measure 10: Agri-Environment

Climate

§ €323 million allocated for Measure 4: Produc6ve and non-

produc6ve investments § €218 million allocated for Measure 8: Forestry § €174 million allocated for Measure 19: Leader § €107 million allocated for Measure 6: Farm and business

development

Learning Outcomes By the end of this session, you should be able to: § Assess pressures facing the farming industry, and encouraging farmers

to diversify

§ Examine/evaluate the terminology used when discussing farm

diversifica6on

§ Evaluate the opportuni6es and challenges facing farm diversifica6on § Discuss the key policy ini6a6ves suppor6ng farm diversifica6on