Diversifications account for one third of farm incomes, according to 2016 Farm Business Survey

Rachel Lawrence of the Farm Business Survey.

Rachel Lawrence of the Farm Business Survey. - Credit: Archant

Money made from diversifications on farms in England totalled £580m in 2016 and represents around a third of their incomes, according to a survey.

Let buildings were the most popular and profitable choice for diversification, according to the Farm Business Survey.

The study, published by the Department for the Environment, Food and Rural Affairs (DEFRA), is compiled by Rural Business Research (RBR), a group of researchers from the universities of Cambridge, Newcastle-Upon-Tyne, Nottingham, Reading, Askham Bryan and Duchy College.

It excludes agricultural contract work, but shows that 32% of total farm business income now comes from diversification. Income from letting buildings for non-agricultural use netted £17,400 per farm.

The next most profitable activity was on farm processing and sales of farm produce, which brought in an average income of £9,600 per farm.

Renewable energy is now the second most popular form of diversification on farms, with 23% of businesses generating green energy. This represents a 5% increase on the year before, partly as businesses raced to get renewable activities online before reductions in tariffs came in.

For those farms generating renewable energy, it provided 9% of their total income for the year, averaging £4,400 per business.

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The average income from farm diversification was £16,600 last year, but the full picture is much more complicated than this, said Rachel Lawrence from the Farm Business Survey.

“For over a quarter of businesses with diversification, this income actually exceeds what is being generated from the rest of the farm business. However for 4% of farms their diversification activities actually lost money,” she said.

“We are seeing diversification becoming an increasingly important aspect of farm income, especially as businesses look to reduce exposure to the volatility of agricultural commodities markets. We expect these trends to continue as farms want to diversify reliance away from core agricultural activities.”