Diversification 2

Driving change on UK farms: is the industry ready for the diversification it needs?

The agricultural industry has always faced a range of challenges, from unpredictable weather patterns to changing regulations. However, today's challenges are more urgent and far-reaching than ever before, as farm businesses grapple with the effects of global issues such as climate change, coupled with the fallout from Brexit, inflation and the ongoing conflict in Ukraine. These issues are having a profound impact on farmers' ability to maintain profitability and remain competitive in an ever-changing market.

As a result of these pressing concerns, many farmers are diversifying their businesses in order to survive. They’re quickly exploring new revenue streams, such as agri-tourism and renewable energy, as well as adapting to the changing labour market by upskilling their existing workforce and seeking out new talent.

In this article, we'll examine the potential benefits and challenges of diversification and explore how ERS is uniquely positioned to help brokers support farm businesses in overcoming their most pressing obstacles.

Exploring the challenges UK farms face today

It’s no secret that UK farmers are under immense pressure to maintain profitability in the toughest of markets. The supermarket squeeze has driven down prices over a number of years, leading to lower margins for farmers (and prompting some to avoid new planting altogether), while energy costs continue to rise. Additionally, the UK's exit from the European Union and the ongoing war in Ukraine have led to a shortage of crops and a faltering supply chain – and many farmers are also struggling to find seasonal workers due to changes in immigration policy.

In the face of ongoing and pressing difficulties, it’s perhaps no surprise that more than a quarter of UK farmers are now considering quitting farming or scaling back their operations.

However, while there are plenty of challenges to navigate, there is also much hope for the farming community – and many in the industry are responding by diversifying their businesses, such as letting out buildings for non-Agri use, generating solar energy and setting up glamping sites. In fact, 68% of farm businesses in England have reported at least some diversified activity in 2021/22 – with celebrity voices like Jeremy Clarkson leading the charge in promoting the benefits of doing so.

Diversification not only provides new sources of income but also helps farmers reduce their reliance on a single crop or product, spreading out their risk. It also allows for the utilisation of under-used resources, such as unused buildings or land, and promotes sustainable practices by generating renewable energy and reducing waste. Moreover, diversification can attract new customers and promote rural development, bringing economic benefits to local communities.

By embracing new opportunities, farmers can adapt to changing market demands and regulations and secure their long-term success.

These diversification efforts are not without their own challenges, though. Farmers face regulatory hurdles, financial risks and technical complexities in implementing new business models. They need support from the Government, from the wider industry – and not least from insurance partners who can help them guard against the risks involved in diversifying their business.

How ERS can help the broker community support farmers

It perhaps goes without saying that having the right insurance policies in place is vital to helping farmers tackle their immediate challenges and seize the opportunities available to them.

The team at ERS is well-positioned to support brokers in providing solutions to farmers as they navigate these challenges and prepare both short- and long-term diversification strategies. We understand the unique challenges facing the agricultural industry and have deep experience in providing bespoke solutions to our clients in this market. Our commitment to protecting our customers' livelihoods is at the heart of everything we do, and we work in partnership with our brokers to ensure that farmers receive the support and protection they need to operate their businesses with confidence – even as many look to radically change their strategies.

As experts in agricultural motor insurance, ERS understands the unique needs of farmers and can provide bespoke cover to reflect the changing use of, equipment, vehicles and more. ERS can also help brokers to support farmers with their diversified businesses, including glamping, accommodation, and customer deliveries.

ERS has a flexible underwriting approach, and its underwriting team is on hand to support brokers and their clients with their bespoke needs. We work closely with our broker partners to develop tailored products and solutions that meet the evolving needs of the agricultural industry. By partnering with ERS, brokers can benefit from our extensive knowledge and experience in the agricultural sector and our unwavering commitment to delivering exceptional customer service.

So, the agricultural industry is facing an unprecedented range of challenges. But with the right support and expertise, there is hope for a brighter future. Together, we can help farmers to overcome the challenges they face, embrace new opportunities, and build a more resilient and sustainable future for the industry.

Find out more information about our agricultural motor insurance here.

For any Agriculture enquiries, contact our team on 0345 600 2284 or agriculturequotes@ers.com

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