Farmers looking for diversification route

ARTISAN: Be sure to take advice before starting any new additional business

The difficulties caused by the recent weather have highlighted the fact that farming businesses are often at the mercy of the elements.

Increasingly, farmers are looking at diversification projects to build a new, sustainable income source.

One option is to branch out into food and drink production, using your own crops to create new artisan products.

Consumers are driving increasing demand for locally sourced and produced goods, such as ice cream, cheese, vegetable crisps, or craft beer and gin – particularly where they are made with a personal touch and perhaps with a family farming story behind them.

Expanding into production from agriculture is a move into an entirely new business area and appropriate professional advice will be essential.

You should be clear at the outset as to what it is you want to achieve with your new business.

Create a business plan, considering matters such as the setup costs, market research, financing, marketing, planning consents, tax issues and food production regulations.

You should also consider the implications on your existing farming business in terms of the time and financial commitment which would be required for the new venture.

If additional finance is required, grant schemes or other government funding may be available, particularly where your new food and drink business will offer sustainability or environmental advantages, or perhaps community benefits such as additional employment.

A commercial loan from your bank may also be another option.

Although the production of food and drink may be closely related to your existing farming business, food production is nevertheless a nonagricultural business.

This has implications in several areas, such as planning.

If any new building is to be constructed, or there is to be a material change of use of an existing building, planning consent may be required.

If you are a tenant farmer, then branching out into a new area may also require your landlord’s consent.

Your local authority will be able to advise on the other regulations that will apply to the new enterprise.

One important legal aspect to consider is the protection of the intellectual property rights (IP) in your business.

IP protection can apply to several aspects, such as the names and logos of your products and brands, any unique product you make, any innovative aspects of your products, or their design or look, all of which could have a significant value.

Legally protecting these aspects of your business will allow you to prevent others copying your ideas and ultimately could ensure that you have a valuable asset which you may be able to sell or license to a third party.

Setting up your new food and drink business – whether it is a small farm kitchen venture, or a larger scale enterprise with your own factory – will be a commitment requiring careful planning and preparation, but with the appropriate professional advice at the outset you should soon reap the rewards.

You should consider the implications on your existing farming business in terms of time and financial commitment

Angus distillery Arbikie Highland Estate uses crops and potatoes grown at the farm for its spirits.