Accredited official statistics

Chapter 5: Diversification

Updated 20 December 2024

Applies to England

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A possible and rational response to the changing position of agriculture in the economy is for farmers to seek to enhance their income from sources other than conventional farming production through diversifying their business activities. Diversification is widely thought to offer considerable scope for improving the economic viability of many farm businesses. Many farm diversification activities can also provide benefits for the wider rural economy and community by, for example, encouraging and providing additional job opportunities.

Most farm businesses engage in other activities in addition to those carried out on their own farm, even if only hire work for another farmer. However, the definition of diversified activity adopted here excludes agricultural work on another farm and is restricted to non-agricultural work of an entrepreneurial nature on or off-farm but which utilises farm resources.

This chapter focuses on those farms which have diversified and excludes farms which do not undertake any diversified activities.

Proportion of farms engaging in diversified activities

Using the above definition, 71% of farm businesses in England had some diversified activity in 2023/24. Figure 5.1 shows that, since 2014/15, this proportion has gradually increased by 10 percentage points.

Figure 5.1: Percentage of farm businesses with diversified activities England 2014/15 to 2023/24

Source: Dataset table 15.2

Figure notes:
1. The break in the series shown at 2017/18 and 2022/23 represents changes in the method used to assign farms to a specific farm type. Where breaks occur, the proportion has been calculated using both methods for comparability.
2. 95% Confidence Intervals have been presented to show the range where the true value is likely to lie and provides an indication of the degree of uncertainty of the estimate.

The most popular diversified activity in 2023/24 was letting out buildings for non-agricultural use, with 50% of all Farm Business Survey (FBS) farm businesses in England engaging in this activity. This was a very small increase of 1 percentage point compared to 2022/23. For 17% of all FBS farm businesses, letting out buildings was their only diversified activity.

The second most common form of diversified activity in England was generating solar energy, with 27% of all FBS farm businesses engaging in this activity in 2023/24. The proportion of farms producing solar energy had been relatively similar between 2017/18 and 2022/23, but in 2023/24 it increased by 5 percentage points to 27%. Since 2014/15, the proportion of farms businesses producing solar energy has increased by 13 percentage points.

The other diversification activities had uptake rates of between 7% and 13% in 2023/24. See dataset table 15.2 for the full time series data.

Income from diversified activities

Figure 5.2: Income from diversified enterprises in England, 2023/24

Source: Dataset table 15.4

Figure notes:
1. Income values are for farms engaging in those activities; farms not engaging in each activity have been excluded.
2. 95% Confidence Intervals have been presented to show the range where the true value is likely to lie and provides an indication of the degree of uncertainty of the estimate.

Figure 5.2 shows that, in 2023/24, farm businesses with diversified activities had an average (mean) income of £26,900 from these activities. At the all farm level, the most profitable enterprise was letting out buildings for non-agricultural use, which bought in an average of £23,900. Generating other renewable energy, providing tourist accommodation and catering, and processing or retailing farm produce all provided considerable income to those farms that participate in these activities, ranging between £13,000 and £19,500.

Although generating solar energy was the second most common form of diversified activity, this enterprise had the lowest average income in 2023/24, £3,200.

For the full breakdown of output and income from different diversified activities by farm type, see dataset table 15.3.

Dependence on diversified income

Figure 5.3: Distribution of diversified farm businesses according to the proportion of their Farm Business Income from diversified enterprises in England, 2022/23 to 2023/24

Source: Dataset table 15.3

Figure notes:
1. Excludes farm businesses with no diversified activities; the proportion of farm businesses with a negative Farm Business Income is different to the proportion for all farm businesses, found in Figure 2.1 of the FBI publication.
2. The legend is presented in the same order as the bars.
3. 95% Confidence Intervals have been presented to show the range where the true value is likely to lie and provides an indication of the degree of uncertainty of the estimate.

Compared to 2022/23, farm businesses seemed to be more reliant on diversified income in 2023/24, with fewer farms falling into the smaller proportion brackets and more failing into the higher proportion brackets of figure 5.3. This was likely driven by Farm Business Income (FBI) decreasing in 2023/24, mainly due to a reduction in agricultural income, following two years of exceptional high incomes.

For farm businesses engaging in diversified activities, there was substantial variation in their dependence on this part of their business. For 31% of farm businesses with diversified activities, income from these activities only accounted for up to a quarter of their FBI. On the other hand, income from diversification accounted for at least half of the FBI for 26% of diversified farms.

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