Many family farms have diversified into new areas that either complement or take them in exciting new business directions, writes John Cradden.
In the months and years during and after the Covid pandemic, diversification was a particularly popular topic in the small business community as one way of reducing economic risk – or even just to survive – amid domestic and international hurdles like rising interest rates, high inflation, spiralling energy bills, supply chain disruptions and a shortage of talent.
Within the farming community, however, diversification has been a part of the business landscape for some time.
“If businesses do not scale, they can find themselves with a very high-cost base and sales too low to sustain a business”
One of the enduring benefits of diversification, for example, has been in helping seasonal businesses to regulate and even out cash flow throughout the year.
It can also bring in potentially higher margins than your bread and butter farming business, particularly if you have economies of scope – the idea that the production of one good reduces the costs of producing a similar product.
It also provides income security which, at a time when many farms are under severe financial pressure from rising prices and the high cost of living, is undoubtedly welcome.
Emerging agribusiness entrepreneurs
Most farm diversification routes lead to the food and drink sector, where lots of opportunities have been created for small artisan producers by a growing appreciation for high-quality and artisanal foods and drinks.
ThinkBusiness.ie has covered many of these emerging agribusiness entrepreneurs, many of whom have successfully exploited a part of their farming business by using economies of scope.
Among them is Liam Byrne, who had previously tended various livestock on a small portion of his family’s 87-acre farm in Co Wexford while leasing the rest of it to another farmer. After watching a Scottish TV cookery programme they set on the idea of switching exclusively to water buffalo, which provides a sought-after combination of lean meat high in both protein and iron but also low in cholesterol. Their first stock was sourced from Johnny Lynch, the well-known Cork farmer behind Macroom Buffalo Cheese, who was also great source of advice and support.
Also based in Co Wexford is Wheelock Fruits, where Cyril Wheelock diversified his strawberry fruit farm into a farm shop after a number of new by-passes around the county were impacting on sales from various roadside stands.
Others have shifted their focus exclusively or predominantly to a spin-off enterprise as a result of early success. Drummond House Garlic is now largest commercial supplier of premium garlic and asparagus products grown on a Co. Louth farm that’s been in the same family for 150 years, but which trialled with their first garlic crops in 2012 before expanding to the entire farm.
While the food and drink sector may be the most obvious route for a diversified farm business, there are opportunities in other sectors. For example, if you have the space and the physical assets, you could think about something related to events or agritourism.
Take Causey Farm, a fully working 300-acre farm that breeds limousin-cross cattle and Belclair ewes, but also moonlights as a venue for teambuilding exercises, educational tours for schools (including ecology, science and geography programmes), visits by international groups to learn about farming as well as a number of specific, seasonal and cultural events.
Another great example is Bogathon, an obstacle course located across a 10-acre field at the Lisduff Adventure Farm in Co Laois. The venture, founded by Rosaleen Dwyer, aims to cater for the growing enthusiasm for team-building exercises and fitness enthusiasts who love competitions like Hell and Back. The farm was already something of a mixed-use business, encompassing five creches, a pet farm and a play centre.
What you need to consider
If you’re thinking about diversifying your agribusiness, the chances are you probably already have the seed of an idea for something that could succeed in the short or long-term.
If the idea is linked to producing a food or drink product, there are a number of challenges you’ll need to consider, according to Lucy Ryan, head of food sector at Bank of Ireland, including:
- Learning about multi-tasking and production techniques
- Upskilling to deal with retailers, sourcing and suppliers.
- Dealing with the costs of ingredients, packaging, distribution
- Figuring out routes to market, staffing and related costs and building an online presence
- Getting to grips with quality and HACCP (Hazard Analysis & Critical Control Point) standards for food production
If you’ve established that your idea can work, Ryan also advises would-be agri-business entrepreneurs to consider the importance of scaling up.
“If businesses do not scale, they can find themselves with a very high-cost base and sales too low to sustain a business,” she said, adding that there’s nothing wrong with just focusing on setting up a micro-business and serving a local audience, and that many will be happy with this.
The ever-evolving sustainability agenda also presents both an opportunity and a burden. On one hand, it’s an opportunity to embrace a ‘farm to fork’ strategy and/or circular food production. On the other, it adds another layer of complexity to the business as retailers and consumers seek to make sure that what the goods or services they are getting are credibly sustainable.
As for agri-tourism, Failte Ireland says activities like farm tours, farm-to-fork experiences, forest bathing and thoroughbred experiences have become increasingly popular with visitors in the last number of years.
What these enterprises all have in common is their focus on experiences rather than the amenities. For example, if you’re providing accommodation, focus less on providing luxury amenities like a TV and room service and more on what guests will get to do while they are there, which could involve activities like working on the farm, cooking, learning ‘survival skills’ like building a fire or foraging for food. Glamping is another fast-growing sector of tourism and would suit a farm environment.
As well as Failte Ireland, Teagasc operates resources and events to teach farmers about the opportunities in agri-tourism.
Whether it’s in the food and drink sector or events and agritourism, there are a number of financial supports, grants and business planning resources available. Applying for them can be very time-consuming, but it’s necessary to be competitive.
Check out information from the likes of Teagasc, Enterprise Ireland, Citizens Information, Bord Bia, Bord Iascaigh Mhara and your Local Enterprise Office.
-
Bank of Ireland is welcoming new customers every day – funding investments, working capital and expansions across multiple sectors. To learn more, click here
-
Listen to the ThinkBusiness Podcast for business insights and inspiration. All episodes are here. You can also listen to the Podcast on:
-
Spotify
-
SoundCloud
-
Apple
