This is not the time to batten down the hatches says rural development expert

The worst thing landowners can do is batten down the hatches and assume something that’s delivering low returns today is going to save the day, says William Fry, MD of rural diversification experts Rural Solutions (RSL).

“The only certainty is that traditional income streams will go, and planning consents will become more challenging and onerous,” said Mr Fry. “Now is the time to take along hard look at estate resilience and develop the right business strategy to reposition away from reliance on traditional incomes and invest in new enterprises in the countryside.”

This advice comes as a survey of estate owners across the UK shows increased confidence and commitment to invest in rural business, despite escalating uncertainty.

Twenty-five percent felt more optimistic about their business prospects now than at the start of 2019 in an annual survey conducted by RSL, a dedicated full-service rural diversification consultancy.

While the results reflect a decline in investment in farming enterprises overall it illustrates a more positive attitude than in 2018 to access to capital, labour and profit potential in rural business. Two-thirds plan to invest in a diversified enterprise and over 85% anticipate retained or increased income.

Compared to 22% last year, however, none of the respondents plan to diversify within farming and fewer than 4% are planning to start or expand a lease for agriculture. There was also a 10% decrease in plans to invest in further acreage.

Mr Fry said the survey identifies that land-based businesses are seeing the current uncertainty as a catalyst for action:

“Enterprising, forward-looking landowners are committing to reshaping and repositioning their business to give it the best chance of thriving in a new era. Paradoxically, the greater the unknowns, the greater the confidence to take matters into their own hands. They have had time to digest that we are living in precarious times and they are not willing to rest on their laurels any longer. They have priced in the Brexit risk – they know agricultural support payments are on the decline, that attitudes to tenancy agreements, public good and planning consent may change –and they are ready to shift from a farming focus towards diversification trends in order to maintain profits.”

More than half of respondents (56%), which represent over 250,000ha of England, Scotland and Wales – the equivalent area to Cheshire – believe it is a good time to be investing in a rural business and a further 11% have committed to capital projects over the next 12 months to deliver alternative revenue sources.

Investment plans are weighted towards the growing appreciation for the countryside’s role in work, wellbeing and pleasure, with 47% investing in commercial space, 40% in self-catering accommodation, 38% in residential lettings and 36% in events including festivals and weddings.

“Some of the top trends developing are health and well-being, co-working space, off-grid holiday retreats firmly plugged into mindfulness and more sophisticated rural visitor attractions,” said Mr Fry. “These need to be in the right location and right environment to have long-term success. It’s more than just thinking “let’s start a farm shop”. It’s important to build a self-sufficient sustainable business that has commercial appeal and longevity. You need to look at the current business, the skills and assets already in the business, and what would complement and sustain these into a profitable future.”

Investment in existing renewable energy was down, however 21% plan to invest in new renewable energy sources.

As grant funding becomes a more distant expectation, a change in attitude to the cost of – and access to – capital, was apparent, with less than 5% considering this an issue. Most (73%) will use bank finance combined with reinvestment from the business to support investment, compared to a much more blended funding package in the past of personal investment, sales to generate capital and grant funding.

More than a third anticipate positive growth in profit in the next 12 months, with a minority of 13% concerned that it would actively decline.

James Thompson, who runs the Sansaw estate in Shropshire, commented:

“It is clear that, whatever happens in the greater political and economic arena, it’s up to us to assert some control over the sustainability of our business and that’s why, despite – or perhaps because of – this, we feel confident to take bold steps now psychologically, strategically and financially to secure the future of the business. As landowners across the UK, we need to invest in growth and in jobs in the countryside, maximise on the natural capital and work with experts like Rural Solutions for long- term traction.”

With the opinion that landowners in the countryside take a more long-term view of return from land, Mr Fry predicts that the commitment to act now on their own terms will ensure these businesses are fit for an uncertain future.

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About The Author

John Swire - Deputy editor of Agronomist and Arable Farmer as well as responsibility for the Agronomist and Arable Farmer and Farm Business websites. After 17 years milking cows on the family farm John started writing about agriculture in 1998 and has since written for a variety of publications and has developed a wide circle of contacts within the industry. When not working John is a season ticket holder at Stoke City and also of late has become a fitness freak, listing cycling, swimming and walking as his exercises of choice.