As farming incomes come under increasing pressure and uncertainty persists concerning UK agriculture’s post-Brexit commercial landscape, more and more farmers are looking at ways they can diversify in order to secure their future financial security.
Tourism, events, retail outlets, specialist or niche food development and renewables are just some of the ways that smaller farms, in particular, are choosing to add another string to their business bow. But, according to a recent NFU Mutual survey, Agri Contracting remains one of the most popular diversification choices with 40% of respondents favouring it as a means of supporting farm income, while 25% identified contracting as their preferred way of getting started in farming.
NFU Mutual agri-contracting and technology specialist, Charlie Yorke, said: “There has been considerable growth in the agricultural contracting sector over the last few years. With the phasing out of the Basic Payment Scheme (BPS) and as farmers look to new ways to operate in the future, contracting is only going to grow in its importance.
“Our latest survey provides clear evidence that contracting now provides a crucial contribution to many farm incomes in today’s highly-competitive marketplace. The growth in contracting also makes it possible for modern, high-tech equipment to be used to get time-sensitive jobs done safely and efficiently.”
Research by NFU Mutual earlier this year found that 60% of farmers employed some form of contractor, however that number is probably far higher when all contractor services are taken into account. Indeed, the National Association of Agricultural Contractors (NAAC), the UK’s only trade association to represent the interests of land-based contractors, claims that 91% of farmers use contractor services of one description or another.
NFU Mutual’s latest survey also revealed that 18% of respondents said contracting offered a way to develop expertise in a chosen field, while 17% said it was a way to invest in modern machinery.
Working with your existing assets
If you are considering a move into the contracting business, looking at ways to increase the versatility and capabilities of your existing machinery before making substantial investments in new kit is a sensible starting point and may well be sufficient, at least in the short term, to enable you to meet demand for machinery-dependent services.
Adding front loaders to one or more tractors, for example, can make a big difference to your service-offering whilst having the option of fitting rubber tracks to a larger tractor gives you a real competitive edge when ground conditions are particularly wet or if a customer is concerned about soil compaction. Even adding front linkages and PTOs can add considerably to the range of services you can provide, and at relatively little cost.
Want to know more?
This excellent NFU Mutual podcast, titled “Agricultural contractors and their role in the farming industry” is well worth a listen. Hosted by Will Evans in conversation with Charlie Yorke and NFU Mutual agent and agricultural contracting specialist, Ian Maddever, it discusses the role of agricultural contractors and how the sector has changed and continues to change in response to a dynamic and increasingly challenging ag market. NFU Mutual has also enhanced its contractor insurance, with policies now providing more flexible cover to cater for a wider range of contracting businesses.
For an idea of average contracting prices across the UK for a host of different services, the NAAC produce a Contracting Prices Guide which is a really useful benchmarking tool for farmers and contractors alike. You can download the latest guide here.
This article from FWi is also worth a read for anyone interested in getting into the contracting business.