What’s driving diversification?

What’s driving on and off-farm diversification?

What’s driving on and off-farm diversification?
<p><b>Recent research from ASB reveals that 30 percent of farmers are considering diversifying into off-farm activities, and nearly a quarter are considering diversifying into a different farming type. GM Rural at ASB, Ben Speedy, spoke to REX Today’s Dominic George about what’s behind the increasing number of farmers looking at diversification.&nbsp;</b></p> <p><b>Listen to the full interview below:</b></p>
<p>Speedy believes a couple of factors are at play, “Diversifying is a lot easier to do these days. If you compare it to five years ago, farming businesses themselves are in a much stronger position. We’ve got higher commodity prices, and a lot of debt has been repaid, so balance sheets are stronger. We're also seeing that predominantly, a lot of those non-pastoral sectors in food and fibre are performing well. Forestry has been performing particularly well, and obviously, there’s carbon credits now too, so that's driving a bit of it. In addition, we are seeing that horticultural land is providing a whole lot of opportunities as well.”</p> <p>Many farmers are keen to de-risk their business off the back of some disruptive years. “If you've got different income streams, that helps with cash flow and some of the difficult times that may arise with regard to your core business.”</p> <p>Succession plans are also driving diversification interest, “we're seeing a lot of family coming back into businesses. The pathway to farm ownership was once a straight line, particularly in the dairy industry around contract milking, 50/50 share milking into farm ownership. This has changed as it’s very much a zigzag these days regarding how you get there. For example, contract milkers will buy a house which will help them get their first herd. So, there's more and more capability that's coming through around thinking about diversification, and they’re putting those strategies into place.”</p> <p>One of the biggest barriers that ASB has seen around diversification opportunities has been whether the business has the expertise, “when people are looking at buying another farm it’s, do they have the expertise to be able to run that operation? Or, maybe I should be thinking around diversification as well. And getting access to that same capability to be able to do something a bit different.”</p>