Farming success depends on more than just crops and livestock. The backdrop of reduced subsidies and climate change is forcing those on the front line of agriculture to adapt what they do to survive.
Many farmers are exploring ways to create new income streams so that their land has the necessary resilience to thrive in the long run, even when things are tough.
One of the more popular ways that farmers are helping to turn new ideas into reality is through asset finance.
Let's set the scene. Traditional farming is not the (largely) predictable industry it once was. Prices for milk, grain, and meat, for instance, can fluctuate overnight while the cost of essential materials needed to run a farm continues to climb.
While prices change, post-Brexit subsidies have injected fresh levels of uncertainty for many working farms across the country. Add in the fact that our climate is ever-changing, leading to more unpredictable weather, and it's clear that relying solely on core agricultural income can feel risky, to say the least.
The case for diversification, then, is a strong one in part because it puts control back in the hands of farmers by introducing alternative revenue streams that are viable, largely because the raw materials and space to create them are already there.
Farmers across the UK are transforming parts of their land into reliable, year-round income while strengthening ties with local communities, helping them to see just how important UK farming really is.
The biggest challenge, often, for farmers looking to diversify isn't the idea itself, but the lack of capital to turn it into a reality. Turning barns into wedding venues or purchasing equipment to turn a space into a coffee shop or restaurant almost always requires more cash than is available upfront.
And while grants from governments offer some support, they simply don’t meet the needs of farmers who need access to capital quickly in order to get projects off the ground.
There are traditional bank loans, of course, but these tend to take longer to process, which can make them a less-than-desirable option for farmers who may need assets or agreements in place quickly.
Uncertainty is another common barrier, with farmers not knowing that a certain asset or entire project can be financed. This leads to many ideas that, unfortunately, never get off the ground because farmers don’t know that there are solutions available.
When combined, these barriers cause good ideas that have the potential to future-proof a farm’s income to stall.
Asset finance has helped to remove those barriers we just mentioned by helping farmers invest in diversification projects such as barn renovations that don’t drain cash reserves or disrupt daily operations.
Rather than paying outright for equipment, costs are instead spread out across several months through manageable monthly or seasonal payments, which align neatly with a farm’s cash flow. The net result is that farmers get the equipment they need to bring their vision to life, and those very same assets can then work to pay themselves off across the next few years.
Additional options, such as hire purchase and leasing, make it much easier to get the assets, be it catering equipment or renewable energy systems, needed for diversification.
Refinancing is another good enabler by allowing farmers to release equity tied up in existing machinery or vehicles without needing to sell them, meaning that, as well as helping you day to day, your assets are also playing a part in making your farm more resilient.
Asset finance’s flexibility is another reason it's so popular. Repayment schedules can be built around the agricultural calendar to give farmers the essential breathing room needed during quieter months.
Finance like this gives you the ability to expand in a sustainable, predictable way that complements what you already have.
Take a traditional UK farm run by a family over several generations. Like many, they are feeling the pinch of decreased subsidies and the effects of climate change. In one field is an old stone barn sitting unused.
The owners, rather than letting it go to waste, decide to transform this unused barn into a rustic wedding venue.
This kind of transformation requires extensive work to ensure it's appropriately lit, has the facilities needed to host weddings, and has suitable access for persons with and without disabilities. All in all, the work amounts to around £100,000.
Rather than waiting for grants to be approved or risking existing cash reserves, the family turns to an asset finance provider. This firm can provide the necessary finance options for this farm so that they can get to work renovating in just a few weeks, with the new space soon taking bookings and while repayments are being made.
Within a year, the venue became one of the area’s most sought-after wedding locations and provided the family with a steady income stream alongside the farm’s traditional operations.
Got a barn with potential? Speak to us about finance options today.
Now, not every farmer has an unused barn, but most will have different opportunities to diversify based on location, land type, and their existing resources. Fortunately, asset finance can provide the funding options needed for a wide range of ventures:
Apart from adding a potential new revenue stream, these projects help to strengthen a farm’s resilience to wider changes while growing connections with the community by attracting visitors.
Here at Shire, we know the challenges and opportunities that are unique to the UK agriculture sector, and our team has extensive experience helping farmers access assets and funding that enable them to diversify.
Our finance agreements come with transparent terms, and with most decisions being made in less than six seconds, thanks to our automation software, farmers can access what they need in just a few weeks, typically
We’ll try to structure repayments around your income cycle, whether you're refinancing machinery or looking for funding for a new, exciting venture.
Taking the first step towards diversifying can feel daunting, but a simple conversation with our team can put many of those anxieties at ease.
Contact us today for a no-obligation chat with our agri-finance specialists to explore how our solutions can help your farm thrive.
This article is provided for general information purposes only and is intended for UK business customers. It does not constitute financial advice, and finance is subject to status and approval.