There are many ways in which farms can diversify - farmers should consider the time implications, financing, legal requirements and market conditions, building on their own skills and expertise to find the right opportunity for them. Having multiple income streams can help even out any seasonal peaks and lows in the business.
It is important to consider the impact of any diversification on the inheritance tax (IHT) treatment of land and buildings. For example, changing agricultural land and property to non-agricultural use can risk these assets no longer qualifying for Agricultural Property Relief (APR).
Here are some income ideas, along with ICAEW Library & Information Service resources which can help you assist your agricultural client.
1. Alternative crops
Farmers can build on their growing expertise by diversifying into a wide range of non-food crops:
- Energy crops – for use in electricity, heat generation and/or biofuels
- Christmas trees and forestry - there may be Countryside Stewardship grants available to fund planting and managing trees
- Industrial fibre crops
- Speciality flowers – including edible flowers and garnishes
Maddocks Farm Organics in Devon tapped into the trend for organic flowers in restaurant dishes and as wedding cake or cocktail decorations, supplying flowers to local restaurants as well as top chefs in London.
On a different scale, Sir James Dyson’s Dyson Farming company runs two anaerobic digestion plants and grows 2,150ha of energy crops annually, which it says generates enough energy for 10,400 homes.
The government has published guidance for farmers on the business potential of producing crops for non-food markets, including details of organisations providing grants – Industrial energy and non-food crops: business opportunities for farmers.
The ICAEW Library has books in its collection on budgeting, costing and tax planning for alternative crops, including:
Books in the Library collection
To find out how you can borrow books from the Library please see our guide to borrowing books.
You can obtain copies of articles or extracts of books and reports through our document supply service.
2. Boarding Kennels, Catteries and Stables
Are there suitable outbuildings which could be converted into kennels, catteries or stables to gain extra income? Farms are likely to have plenty of space available for exercising dogs or horses.
Having stables opens up the possibility of running a riding school - some riding schools house horses at a reduced rate in return for permission to use the horses for riding lessons. A Riding Establishment Licence from the local council will be required. Some farms with stables have also diversified into ‘care farming’, offering therapeutic riding lessons to learners with special needs.
Farmers should weigh up local demand and competition and bear in mind that demand for cattery and boarding kennel services is inevitably seasonal.
Business Focus
Croner-i Business Focus provides profiles of many key trades and business sectors, including boarding kennels and equestrian businesses.
Each profile includes information on key market position and trends; trading, commercial and legal issues; and legislation. To find out more about Business Focus, please contact our enquiry team on +44 (0)20 7920 8620 or at library@icaew.com.
Industry profiles
The ICAEW Library & Information Service has compiled a series of industry profiles. The series aims to provide in-depth briefings on each sector, including key insights into recent performance, market segmentation, trends, challenges, and opportunities.
A profile on the UK equine industry is available.
3. Events and experiences
The ‘experience economy’ has grown in the last 10 years, with the British public now increasingly prioritising spend on entertainment, events, and travel rather than material objects, according to Barclays research.
Farmers could showcase their own skills by running demonstrations of heritage farm crafts such as sheep shearing or wool spinning, or work with outside experts to provide a venue for rural craft themed workshops as diverse as scything, hedge-laying, wild foraging, skep making or spoon carving.
The Farmers Weekly 2018 Diversification Farmers of the Year winners, farming brothers Charlie and Will Moreton, have taken advantage of the rising demand for rural-located leisure activities by creating the ‘Wolf Run’, a 10k wild running event on their farm. Since starting out in 2011 the business now employs several staff and has expanded into offering shorter 5km & Junior courses and themed running merchandise.
4. Farm shops
Many farmers have diversified by starting a farm shop business. Government Farm accounts in England 2023/24 statistics found that around 6,100 farms engaged in processing/retailing of farm produce, with the average enterprise income from these activities being £19,500 per farm during this period (see Chapter 5: Diversification).
Farmers can add value by producing speciality products for consumers, such as cheeses, smoked-food, yogurt, ice-creams or cakes. Selling directly to consumers through a website, farm shop or market stall, or to local businesses like butchers, pubs and restaurants, can cut out third party costs. Local councils can advise on meeting relevant health and safety and food hygiene regulations.
External resources
5. Farm tours
VisitEngland’s 2024 Annual Attractions Survey shows that farm attractions recorded an 11% increase in visitor admissions compared to the previous year, making farms one of the best performing sectors over the long term. The Full Trends report provides figures for average farm attraction adult admission charges and revenue.
The Access to Farms (ATF) website has resources and a wide variety of case studies for farmers interested in offering educational farm tours for schoolchildren. ATF offers a Countryside Education Visits Accreditation Scheme (CEVAS) for farmers who would like to host visits from schoolchildren.
External resources
6. Microbreweries and distilleries
Despite economic pressures on independent breweries, consumer demand for craft beer is high with 55% of beer drinkers saying they drink local craft beer, according to research from the Society of Independent Brewers and Associates.Microbreweries may be eligible for the new Small Producer Relief, which applies to products with an alcohol by volume (ABV) of less than 8.5%. However, industry margins are tight, and competition is fierce – a new beer brand must be distinctive.
Demand for craft spirits with innovative flavours continues to increase, with industry press reporting an increase in the number of UK distillery businesses, reaching 387 in 2023. This is being fuelled by niche gins and the shift towards smaller 'local brands'.
Industry guides
The ICAEW Library & Information Service has compiled a series of industry guides. The series aims to provide a package of information on each sector, including links to market research reports, statistics, trade bodies and trade journals.
The guides also provide details of key player reports, market reports and mailing lists which ICAEW members and ACA students can order through the website or by contacting our enquiry team.
eBooks
The Library provides full text access to a selection of key business and reference eBooks from leading publishers. eBooks are available to logged-in ICAEW members, ACA students and other entitled users. If you are unable to access an eBook, please see our Help and support advice or contact library@icaew.com.
Terms of use: You are permitted to access, download, copy, or print out content from eBooks for your own research or study only, subject to the terms of use set by our suppliers and any restrictions imposed by individual publishers. Please see individual supplier pages for full terms of use.
7. Self-storage
A new opportunity for farmers – converting farm buildings into self-storage containers. The market is a fairly local one, as the Self-Storage Association UK’s Annual Industry Report 2025 found that 41% of self-storage users travel 15 minutes or less to their unit. The rising cost of fuel and inflation could further influence customers to use storage close to their home or business.
Farmers will need to fully consider the tax implications and gain planning permission if changing land from agricultural use.
8. Tourist accommodation
Accommodation options include providing bed & breakfast, campsite or holiday cottage rentals. Farmers may have suitable fields which could be provided for campers or outbuildings that can be converted into cottages. Government Farm accounts in England 2023/24 statistics show that the most profitable form of diversified activity was letting buildings for non-farming use, with an average enterprise income of £23,900. Similarly, tourist accommodation and catering was the third most profitable diversified activity, with an average enterprise income of £16,500 (Chapter 5: Diversification).
There is a large domestic market for camping and caravanning holidays. Farms can be appealing places to stay for holidaymakers who enjoy immersing themselves in rural scenery. There will be opportunities to sell on farm produce to these visitors, for instance hungry campers looking to buy eggs and bacon.
Farmers will need to ensure they gain local authority licensing and planning permission and meet minimum legal facility standards. They should also research local demand as the sector is very competitive, with growing competition from Airbnb hosts.
VisitBritain’s 2022 global MIDAS report indicates a strong potential demand from international tourists, particularly from Western Europe and Oceania, for rural experiences. Survey respondents ranked these desired holiday activities highly: experiencing coastal places and scenery, exploring local food and beverage specialties, experiencing rural life and scenery, and enjoying outdoor walks, hiking or cycling.
To attract these visitors, try providing online booking facilities and flexible rooms and spaces for extended families or singles. Promotional marketing should highlight any day trips available in the local area.
The ICAEW Library has books in its collection on costings/taxation of farm and holiday accommodation, including:
Books in the Library
To find out how you can borrow books from the Library please see our guide to borrowing books.
You can obtain copies of articles or extracts of books and reports through our document supply service.
External resources
9. Vineyards
The UK's winemaking industry has experienced remarkable growth in recent years, establishing itself as one of the fastest-growing agricultural sectors in the country. According to IBISWorld, its total revenue will reach an estimated £422.4m in 2025. The hotter temperatures which have become more common in UK summers recently have led to higher quality wines being produced here. Still, farmers must bear in mind that the crop can be easily damaged by increased variability in growing conditions and more extreme weather events.
Vineyards also offer further spin-off opportunities for tasting events and experience tours. For example, Little Wold Vineyard, winner of the 2020 Farmers Weekly Diversification Farmer of the Year, offers a full range of activities alongside traditional wine production: weddings, corporate hire, seasonal events, wine tasting and vineyard tours.
For more information, see our in-depth profile of the UK vineyards and wineries industry.
Industry guides
The ICAEW Library & Information Service has compiled a series of industry guides. The series aims to provide a package of information on each sector, including links to market research reports, statistics, trade bodies and trade journals.
The guides also provide details of key player reports, market reports and mailing lists which ICAEW members and ACA students can order through the website or by contacting our enquiry team.
Books in the ICAEW Library collection
The ICAEW Library has books in its collection covering costings/taxation of vineyards, including:
To find out how you can borrow books from the Library please see our guide to borrowing books.
You can obtain copies of articles or extracts of books and reports through our document supply service.
10. Worm Farms
An alternative livestock option! Worms can be reared for compost or fishing bait, to be sold on to individuals or business customers such as fishing shops, pet shops or garden centres. Land will need to be given over to worm beds and suitable manure and foodstuffs provided for the worms. Harvesting, cleaning, packing and shipping the worms must also be considered. Another potential product is vermicompost, a natural compost produced using worms.
Once established, worm farmers can go on to offer consultancy to others considering starting up a commercial worm farm. Alternatively, farmers can run short experience courses for members of the public who want to learn how to look after their garden wormery.
11. Ice cream production
On-farm ice cream manufacturing is now a recognised diversification strategy in the UK’s dairy farming sector. It can provide farmers with new revenue streams to buffer against market volatility and subsidy reductions.
Often focusing on artisanal and premium offerings, a number of farms have successfully ventured into on-site ice cream production, commonly distributing the resulting products through farm‑gate sales, local events, or online channels.
Dukes Ultra Premium Ice Cream is one example of an ice cream brand launched by a family farm as part of a dairy farm diversification initiative; another is Cumbrian Cow Ice Cream.
However, it should be noted that diversification into ice cream production is not without its challenges — Farmers Weekly stress that careful market research is key to success, and point to the significant associated costs and time demands.
Industry profiles
The ICAEW Library & Information Service has compiled a series of industry profiles. The series aims to provide in-depth briefings on each sector, including key insights into recent performance, market segmentation, trends, challenges, and opportunities.
A profile of the ice cream manufacturing industry is available.
More resources
Business Focus
The ICAEW Library & Information Service has access to Business Focus from Croner-i. It provides Business Opportunity Profiles of nearly 300 small business types, which can be used to assist your client with starting a new business. Each profile includes information on key market position and trends; trading, commercial and legal issues; and legislation.
Profiles include:
- bed and breakfast (B&B)
- boarding kennel/cattery
- café
- campsite
- craft bakery
- farm shop
- holiday let
- homemade pickle and preserve maker
- horse riding school
- independent brewery
- livery yard
- ornamental plant nursery
- tea room
- touring caravan site.
Extracts can be emailed to ICAEW members and ACA students (subject to copyright restrictions). Contact us by phone on +44 (0)20 7920 8620, by web chat or by email at library@icaew.com for help or more information.
Industry guides
The ICAEW Library & Information Service has compiled a series of industry guides for ICAEW members and ACA students. The series aims to provide a package of information on each sector, including links to market research reports, statistics, trade bodies and trade journals.
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