The effect of Covid-19 on diversification begs the question what the future of diversification is for many farming businesses, particularly those who have had to look hard at what they have done in the food sector supplying food services such as coffee shops etc. Many have had to switch their model to the direct customer sales. These customer sales will inevitably taper off after lockdown as people move back to a new normal pattern of behaviour and the full effect of redundancy and higher unemployment, higher taxes and lower growth in the economy kicks in.
Enterprises such as self-storage, caravan storage and rural tourism have a relatively safe business model as they appeal to the ‘staycation’ type market and possibly to the slowdown in property market. There will be more interest in these activities. Those letting office spaces will need to think of a more flexible approach as these companies will need to have a proportion of their staff working from home or remotely but this, if anything, should increase the demand for small office space. In the post 2008 crisis we saw demand for industrial space for people who had been made redundant and were setting up their own businesses.
With interest rates at very low levels and a massive incentive from the government to invest with a light touch approach on planning regulations, now is a great time for farming businesses to diversify. Warnings would be around property valuations going forward and the impact this could have on land price in terms of loan to value ratio and a well calculated business plan is the key.
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