Business clinic: Development with minimum impact on farm business

This month, Farmers Weekly’s experts give advice on appealing against RPA penalties, insuring young drivers, managing cashflow and farm developments with minimal impact.

Q I want to explore some development options on my farm. How do I identify the areas which will have least impact on my farm business?

A There are numerous options open to farm business managers looking to diversify income streams and add value to agricultural assets. The key is to identify those that provide a combination of the highest likely returns and the least impact on your farm business.

Renewable energy, residential or commercial developments potentially offer substantial returns and farmland and buildings are often well suited to these uses.

In addition, low interest rates make agricultural developments such as new buildings and dwellings an attractive investment.

Rather than simply investing in the first opportunity that presents itself, business managers should consider a range of investment/development opportunities to decide which is the best fit for their business and which makes the best use of capital.

James Turner
Agribusiness
consultant
Savills
Agribusiness

However all of these developments require land and buildings and unless carefully planned, this can put pressure on the farming enterprise.

Land classification has again become a salient issue in planning applications, with planning authorities commonly requesting an independent report on land quality when considering residential developments and renewable energy projects.

The authority will be seeking to assess the loss to the farm business and to productive capacity in general from the proposed development. Location, area and soil type are just a few of the criteria which will be considered.

Strategic development plans for farms and estates should take account of land quality and the impact on the ability of the remaining land holding to be viable, also on the fixed cost structure for the remaining farming business if development of part of the land holding were to go ahead.

There are also very important tax implications for some types of development, so any plans should consider the likely impact on the longer term future of the business.

This includes the siting of housing, energy installations and other diversified income streams as these could affect overall asset value and desirability.

Plans should also be considered in the light of likely future development of the farming business – are the residents of new houses in or close to the farmyard likely to be concerned by a new grain store or poultry house, for example?

Read more from our Business Clinic experts

The information provided in these articles does not constitute definitive professional advice and is provided for general information purposes only.