Farm DiversificationWhy Diversify? – Mitch Portman ACII Area Business Development Manager

February 2010

Why Diversify

• Economic necessity – Farming is asset rich but cash poor– Diversity supports cash flow

• Homogenous goods– Barley from one field is identical to barley from another

• No one provider has the power to influence the market

• Lack of stability in income

• Dormant assets – Buildings, land, amenities

• Balancing tradition with opportunity

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Typical Types of Farm Diversification

• Cream Teas

• Bed & Breakfast/holiday lets

• Farm shops

• Cafe/restaurant

• Education

• Commercial use of buildings

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Why do I need to speak to my insurers?

• Liability insurance – does the business description on your policy match your activities?

• Buildings & use – different activities have different risks your insurers need to consider whether they can provide insurance for that risk

• Cost – insuring your diversification is a business expense which you must factor in when planning the business

• Understand risk – balance risk against economic considerations

• Cornish Mutual specialise in insurances for farmers and businesses in the rural community– however, whilst we may be able to offer advice, we may not always be able to insure your new venture

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Member case study – Mike & Claire Parnell invite you to Carruan Farm

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Carruan Farm - History

• Farming in this location since 1958 – Polzeath

• 3rd generation now working the farm

• Originally a sheep farmer, adding a suckler herd, & then pigs

• Started selling meat from home

• Opened a cafe for teas & cake

• Had a bullock killed – why don’t we try Sunday lunch in the cafe?

• The rest is history, the first Sunday lunch was fully booked & the facility has now developed into a fully fledged restaurant

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Combining Farming with Diversification 6

The Restaurant 7

Remember to consider Risk 8

Facilities – in a safe environment 9

A safe way to be shown around the estate 10

Education – Mike & Claire share their passion for farming with local schools

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Lessons Learned

• Do Not overstretch

• Ensure that the farm does not suffer (it will)

• Do Not be tempted to pull money from the business to support the farm

• Learn to delegate – there are only 24 hours in a day

• Be prepared to bring in expertise

• Employ staff wisely

– careless uncommitted staff can have a devastating affect on your business in a very short space of time

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Lessoned Learned continued

• Be prepared for criticism and try to accept this objectively

• Learn quickly – trial & error

• Change is ongoing – matters change on a weekly basis – be flexible

• Value yourself – the business needs you

• Stay focussed

• Be passionate about your business – it’s infectious

• Stay in touch with your insurers

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Lessons Learned - continued

• Do what you enjoy

• Planning for the next generation – do they want to carry on with the business

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