Farmers are increasingly exploring diversification projects. Jeremy Clarkson’s new ‘Only Farmers’ website, which aims to connect people to rural areas whilst supporting farm businesses through diversification, demonstrates the kind of exciting opportunities available within the farming industry.

Diversification schemes come in all shapes and forms, ranging from visitor experiences and holiday accommodation to events and educational activities. Farms have been used for school trips, wedding venues and holiday stays, presenting exciting business opportunities.  However, alongside these opportunities comes a responsibility for thorough legal and regulatory preparation. To highlight some of the risks associated with these new revenue streams, we have put together a few pointers to help you avoid common pitfalls and ensure your new diversification projects can flourish.

Risk 1: Lacking a clear long-term strategy

New business opportunities are often pursued without sufficient strategic planning, leading to unforeseen operational clashes that can disrupt the core farming business.

“I’ve seen projects where a wedding venue is bolted onto a working farm without considering access, privacy, or farming operations — it creates conflict almost immediately.”

While diversification opportunities may appear attractive on paper, they do not always align with a farm’s landholding objectives or long-term resilience. To minimise the risk of operational clashes, business owners should develop a whole-estate plan that clearly identifies opportunities and threats, providing a sustainable long-term strategy for the business.

Risk 2: Getting the structure wrong

Getting the structure right is key for a business’s financial stability, yet this is often overlooked. Diversification activities are frequently operated through the wrong ownership structure, which can trigger unexpected tax liabilities and potentially jeopardise Agricultural Property Relief (APR). Holiday lets and events businesses, in particular, are frequently operated informally within the farming business, creating unnecessary financial and succession risks.

“Only later does the family realise they’ve inadvertently complicated succession or increased inheritance tax exposure.”

To avoid these complications, farming businesses should seek advice on ownership structures and risk ringfencing. Getting early professional advice can help ensure appropriate structural planning, allowing diversification opportunities to be pursued with clarity and confidence.

Risk 3. Underestimating Planning Complexity

Diversification projects are often delayed because business owners overlook regulation guidelines at the planning stage. Common issues include planning permission and licensing.

“I’ve seen projects delayed by years because access, parking, or environmental considerations weren’t addressed at the outset.”

These setbacks can be avoided by carrying out a thorough feasibility and planning review. Seeking professional advice early on helps ensure that your business venture is properly planned, compliant and protected before investing any significant capital.

Risk 4: Inadequate documentation arrangements

Farming diversification often involves collaboration with third parties, such as event companies or hospitality brands, to bring new business ideas to life. However, what may appear to be a straightforward opportunity can quickly lead to costly disputes later down the line if the underlying agreements are poorly drafted or fail to reflect the parties’ expectations.

“We’ve seen handshake deals turn into difficult disputes where expectations on both sides were never clearly set out.”

In some cases, these arrangements can even result in long term restrictions on land use. For this reason, clear and comprehensive legal agreements are essential. They should outline the key terms of the diversification scheme, including the duration of the arrangement, control and maintenance responsibilities, and exit arrangements, to prevent any conflict or confusion for the parties involved.

Risk 5: Negative Impact on Core Farming Business

The last thing any farmer wants is for a diversification project to disrupt core farming operations. This can happen when biosecurity and operational risks are not properly considered, creating conflict between visitors and day-to-day farming activities.

“Introducing visitors onto a working farm without thought for livestock or machinery movements can create real safety and operational challenges.”

With sufficient planning, these risks can be effectively managed. A robust plan should consider the physical separation of farming and visitor activities, alongside appropriate insurance and liability reviews. In this way, farmers can embrace exciting new opportunities while ensuring their business remains protected and commercially viable.

One last word

“Early advice and strategic planning are what separate the projects that thrive from those that create unintended problems.”

The most successful diversification projects enhance the value of the land while creating sustainable, complementary income streams. By planning ahead and addressing any potential risks before they escalate, your business will be well positioned to grow sustainably and unlock the full value of its diversification strategy.

Byline from Emma Florentin-Lee, Owner Partner at Oury Clark Chartered Accountants