During uncertain times, it’s important that business present their would-be customers with a diversified range of products. That way, if demand for (or supply of) one product should suddenly plummet, the remaining ones will be able to pick up the slack. The UK agriculture industry now finds itself going through an unpredictable, transitionary period. Farm insurance provides a means of absorbing the shocks – but perhaps still more important is diversification.
Why Diversify a Farm?
In the context of farming, there are four key benefits to a diversified offering.
More Revenue
Diversification often means expansion, which will bring in more revenue from your existing customers. People and businesses who buy your chickens might also have cause to buy your eggs.
Adapting
When you have a diversified offering, you can more easily observe trends in demand. If you notice that sales of a given product are increasing over time, you might pivot toward that product. More generally, doing lots of things will let you see what you’re good at, and what works for your business.
Stability
As we’ve mentioned, offering many different products leaves you less vulnerable to shocks in a single one. If a sizeable portion of your income comes from holiday homes, renewable energy grants and retail, then you won’t be at risk of being wiped out by a food scandal.
New skills and contacts
By diversifying, you’ll introduce yourself to new skills and contacts, which may prove valuable in the long-run. This, in turn, might allow you to do your current job more effectively.
What are the best means of diversifying?
According to data from the Defra, around two-thirds of farms in the UK have diversified in some way or another.
You might suppose that this might mean simply bringing new animals and crops into the farm. But farmers might equally be more creative and ambitious. Farm shops provide the enterprise with a means of selling directly to local customers. Farms might equally provide education to the local community, thereby providing a wider benefit to the local economy and helping to establish their own brand as trustworthy. On-site accommodation, tourism and catering are also popular, as they might provide valuable income during times of the year where income is lower.
Renewable energy can also be a major boon for farmers. Around forty percent of NFU members host renewable energy onsite, including wind turbines. Demand for broadband and 5G infrastructure might also skyrocket in years to come, during which many of the workers now doing their jobs from home will continue to do so, and need reliable internet connections. It’s entirely plausible that new opportunities for diversification will reveal themselves in the future. Forward-thinking farmers will rush to take advantage.
