Guide to farm diversification opportunities after the Basic Payment Scheme (BPS)

The post-BPS era has brought about significant changes in the agricultural landscape of the United Kingdom. Whilst there are several different grants and schemes available to landowners, farm diversification is a viable strategy to secure financial stability and thrive in the changing environment, as farmers face the challenges of adapting to this new reality. This article will explore farm diversification, examining the legal considerations and opportunities for farmers in the post-BPS era.

Understanding farm diversification

Farm diversification refers to the practice of expanding agricultural operations to include non-traditional activities or ventures. By diversifying their income streams, farmers can reduce reliance on the uncertain profitability of traditional farming practices and mitigate the impact of the loss of BPS.  However, it is important to note that farm diversification can involve legal complexities that must be carefully navigated to ensure compliance with regulatory frameworks. 

Guiding you through diversification opportunities

Our Agricultural team at Tees can play a crucial role in assisting farmers in enabling and advising on potential diversification opportunities. We have an in-depth understanding of the legal and regulatory frameworks governing various sectors, enabling us to guide farmers through the process alongside their accountants and land agents. Some common avenues for farm diversification include: 

Renewable energy projects: With the increasing demand for clean energy, farmers can explore opportunities in wind, solar, battery, biomass energy or anaerobic digestion. Our renewable energy team can assist by advising on contracts, options and leases including addressing planning and environmental mitigation schemes. 

Agri-tourism: Many farmers have found success by opening their farms to the public and offering attractions such as farm tours, educational workshops, camping, glamping or other farm-stay experiences. Our team of solicitors can help you navigate the related regulations,  liability, health and safety and business structures including commercial agreements and terms and conditions. 

Food and beverage production: Value-added activities such as on-site food processing, artisanal products or farm shops can provide additional revenue streams. We can assist in establishing appropriate business structures and ensuring compliance with food safety regulations.

Rural recreation and leisure: Using farm assets for activities such as nature reserves, fishing lakes, equestrian centres, adventure parks, events, festivals and secure dog walking fields can attract visitors and generate income. We can help farmers address legal matters related to liability and public access rights, as well as advice on commercial agreements and terms and conditions. 

Natural resources: Biodiversity Net Gain can offer alternative income streams for farmers.  Our Natural Capital Team can assist with drafting and negotiating long term Farm Business Tenancies (FBT's) for Biodiversity Net Gain and Woodland Carbon Units, negotiating documentation for landowners documenting arrangements with habitat bank providers including FBT’s and Habitat Management Agreements, dealing with Section 106 Agreements where offsite offsetting is being provided for development sites getting approval of lenders to enter into such agreements where land is charged to a bank. 

Legal Considerations when diversifying your farming business

Engaging solicitors familiar with agricultural law is essential for farmers pursuing diversification projects. Here are some legal considerations we can assist with:

  • Considering the tax implications with your accountant, both on terms of taxation of income streams and capital taxes is vital. Our property and commercial team can assist with implementing tax advice given by re-structuring business and finance and/or moving land and assets into separate legal entities. 
  • contracts and agreements: developing robust contracts is vital when engaging in activities such as leasing land for renewable energy projects, negotiating supply agreements, or partnering with third-party businesses. Our commercial  team can ensure the protection of farmers' interests and avoid potential disputes.
  • regulatory compliance: diversification activities are subject to a range of regulations, including health and safety, environmental protection, food safety, and licensing. Our regulatory team can guide farmers in meeting compliance requirements and reducing legal risks.
  • intellectual property: farmers involved in product development or branding should consider protecting their intellectual property through trademarks, copyrights, or patents. Our commercial team can assist in securing these protections and enforcing them if necessary.
  • succession planning: farm diversification often involves long-term investments. We can help farmers navigate succession planning, ensuring a smooth transition of assets and business operations to future generations running the business.

Chat to the Author, Kirsten Rimmer

Senior Associate, Commercial Property, Cambridge office

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