Want (or NEED!) more income for your farm business?
As we head into our 4th year of the Agricultural Transition Plan for England, many farmers are facing up to 70% reduction in their BPS payments.
Shit just got real.
So what do you do about it? Well, you can hide under the duvet and, like the tax man, hope he never comes or you can face reality and put a plan in place as to how you're going to fill the gap.
And here are the top 4 diversification options available at this years Farm Business Innovation Show to do just that.
Renewable Energy
Onshore wind power has taken a back seat in terms of renewables (largely due to the planning requirements here in England) and it's solar and battery storage that are taking centre stage.
Here are the headlines when looking at solar/battery storage:
- Expect in the region of £1,800/MW installed
- Developers are looking to install a minimum of 20MW
- Across sites of between 1 - 4 acres in size
- Terms are typically for 30 years
Access and proximity to a grid connection is the number one concern for all developers. The closer you are to a substation, the better!
Self Storage
The self storage industry is booming judging by the number of companies exhibiting at this years show.
Business models and pricing vary widely so please do your research before going down this route. Some companies will sell you just the containers whilst others can provide a full turn key solution and operate the site on your behalf.
Biodiversity Net Gain (BNG)
Relatively new to me this year but I'd put money on this one being BIG in 2024.
Along the lines of natural capital, BNG is designed to not only protect but also enhance the natural environment. The aim is to leave it in a better state than we found it.
In a nutshell.
- As of January 1st 2024 developers in England will be legally required to enhance biodiversity by 10%
- If they can't do that within their own site then they have the option of purchasing BNG units from elsewhere (and this is where farmers and landowners come in!)
- Statutory credits are priced between £42k - £650k/unit (no, that's not a typo!)
- Developers require 2 credits to offset 1 BNG unit meaning a minimum of £84k per statutory credit
A word of caution - whilst the numbers seem very attractive, they come with very long-term commitments - typically 30 years plus. And unlike other environmental schemes you're unable to 'stack' or 'bundle' them together.
More information on BNG can be found here.
Holiday lets & Events
Whilst the glamping craze may have peaked, there is still plenty of opportunity in the rural holiday lets and events sector.
Whether you're looking build cabins on site or pitch a tepee for an outdoor wedding, there is something available for all size of businesses.
As with all of these schemes, there is no such thing as easy money. Do not underestimate the start-up and running costs of the rental or wedding sector (the staring point for some cabins is circa £25k). But if you are in the right location it can be a great earner for your business.
Planning requirements are a key consideration when it comes to either of these so please seek expert advice before jumping in.
More information on the Farm Business Innovation Show can be found here.
Until next week......