Mark Suthern, Barclays National Head of Agriculture says if you haven’t yet diversified, then you’re likely to have at least considered it or are about to embark on a new project.

Diversification is a topic of much discussion at the moment, as more and more farmers look for innovative ways to develop their business and search for new sources of growth. Many farmers have already taken the first step, and many more are considering doing so. According to government figures, approximately half of the UK’s farmers have already diversified, bringing in an average of £10,400 extra revenue per farm as a result. It’s an encouraging figure for many working in the sector, and it creates a compelling argument for farmers working out what risks they can and can’t afford with their business.

Barclays helps many of its agriculture clients to diversify, providing the funding that is needed for them to buy additional machinery, invest in technology or hire more staff and make their ideas a reality. Working with thousands of farmers on their projects has given us a unique perspective on the differences between success and failure, and below are my top tips for getting it right.

  1.Be passionate

Whatever you choose to diversify in, make sure it’s a venture you’re passionate about as it will require time and dedication to make it a success. 

Buildings Farm is a 200-acre arable farm in Norfolk which has been with the same family for four generations. The owners knew that if they wanted to keep the land they would need an additional revenue stream. While they looked at the possibility of growing different kinds of vegetables and even introducing a herd of cattle, they decided that offering glamping would fit in with their lifestyle.

One of our Barclays Agricultural Managers, of which there are 125 across the UK, got to know the owners and knew their passion would make Buildings Farm an attractive destination, giving visitors the opportunity to learn what it’s like to live and work in the countryside. He was able to advise on the amount of money they’d need and help them secure Barclays funding which covered the costs of new showers, all of the glamping equipment and tents for guests.

They now have capacity for three groups of visitors to stay on the farm at any one time, providing the owners with a solid additional source of revenue.

 2. Build from the core

There is a misconception that diversification can save an ailing core business. This might be true on rare occasions, but it is much more likely to use up cash and potentially cause more problems.

Your core business must be solid enough to support the new offering while it develops into a viable proposition. For example, Whittern Farms in Herefordshire has a strong poultry processing business successfully producing 5.5 million broiler chickens every year, and the owner decided to steer the farm into fruit production as well.

Fruit opened up a new revenue stream and the farm now grows 150 acres of blackcurrants. The majority of the crop is used to produce Ribena, but there’s a small amount reserved to make the farms own highly popular and award-winning British cassis, which is sold in local pubs.  

 3.Be resourceful

No one is good at everything, and in fact, recognising your weaknesses is a real strength. Identify the areas you need help with and consider collaborating with specialists to bring your idea to life.

For example, if you are thinking about turning one of your barns into a wedding venue, then think about all the new elements you’ll need in order to make it successful, such as a dedicated website and seasonal staff. Marketing is a prime example where expert support can help create value over time – a professional can be commissioned to create a marketing plan to give insight into ways to reach your target market.

For the Metcalfe family in North Yorkshire, diversification came in the form of a heavy haulage business with 85 trucks covering the UK and Europe, and a vehicle repair business. The business was started in 1940 with 18 cows and 120 acres, and now it has 1,300 cows and 3,200 acres. To Metcalfe Farm, innovation is very important, and Barclays was there to support their growth and advise them along the way.

Final words…

If you’re unsure of how to approach diversification, get in touch with an agricultural expert from your bank whose job it is to get to know your business and sense-check your proposal. They will know how successful similar ideas have been for other clients, and can draw on those experiences to help ensure your diversification is a success.