Farm diversification is the single most prominent opportunity debated amongst farmers in developed farming nations. This is my recurring observation from agricultural journalism events I’ve attended in Australia, Germany, Italy, The Lebanon, South Africa, the UK and the USA over the past two years.
The reasons are varied, but, irrespective of where people farm, the drivers are all fundamentally the same – volatile commodity prices and reduced profitability, the rising cost of reinvestment in farm infrastructure and the need to include the younger generation within businesses. In some instances, the driver is more dramatic resulting from natural disasters, such as drought or floods, or diseases like Foot & Mouth.
Another of my observations is that when it comes to leading the way in farm diversification, Scotland has a big part to play. Farmers here have had to develop income streams from other activities, predominantly because farm size and underproductive land has driven the need. I’m always confident to suggest to farmers and rural leaders from other countries to come to Scotland and learn from what we have done.
And our diversification success is economically important to Scotland and our policy-makers. Direct income from one element, farm-based, or ‘Agritourism’, was estimated to be £63.1m/year in 2016 and £106m/year in total output, resulting from the knock-on benefit to other businesses such as taxi-drivers.
In Italy, farm diversification is integral to the Government’s economic strategy where a defined Agritourism sector underpins the country’s valuable food and drink export and tourism industries.
I’ve recently returned from organising an agricultural leaders’ event in Lexington, Kentucky in the USA, where farming is built on tobacco, bourbon and horse-racing. The demand for tobacco is in decline, yet it is still profitable and very technologically simple to plant, grow and harvest. Using little else than migrant labour and drying barns, often built by farmers’ great-grandfathers, the investment needed to grow it is minimal. However, falling tobacco hectares, coupled with a healthy number of young people entering farming and the rise in land prices driven by the racing industry, is prompting farmers to look at diversifying into niche products, farm tourism and selling direct to build enduring businesses. This need to do different is being seen in many other parts of the USA as well.
Other instances have been prompted by opportunity, such as in South Africa. When Nelson Mandela came to power, one of his many visionary political moves was to remove the Government’s control of the nation’s wine industry. Entrepreneurial farmers saw this as a green light for investment in wine-making, related tourism and building a world-renowned name for South African wines.
My hunch is that farm diversification is not just an optional extra any more, but rather an essential part of farming’s future all over the world.