Farm Diversification - National Rural Network

1. Introduction
The quality of life in rural areas and diversification of the rural economy is the main focus of measures
contained in Axis 3 (delivered through the LEADER programme by local development companies) of
the Rural Development Programme 2007-2013. The diversification of mainstream farm activities into
non-agricultural activities is an Axis 3 measure with the objective of stimulating and supporting the
diversification of farm assets. At farm level this translates into the mobilisation of farm fixed assets into nonagricultural
economic activity for economic gain by a member of the farm household.
This case study is prepared on behalf of the National Rural Network (NRN). The objective of this study is
to analyse farm diversification projects grant aided by Sligo Rural Development Partnership (SRDP) for the
purpose of highlighting and disseminating good practice within the Rural Development Programme.
2. Farm Diversification in Context
Farm diversification is concerned with improving the capacity of the farm, or farm resources, to meet
the immediate and future needs of the farm household 1 . This is achieved by widening the base of a
farm business to include all the non-agricultural uses that available resources can be put to, or through
any major changes in land use or level of production other than those related solely to agriculture.
Diversification may be further defined as the entrepreneurial use of farm resources for a non-agricultural
purpose for commercial gain 2 . This definition introduces the concept of entrepreneurship in diversification.
Historically the production base of most Irish farms was diversified, producing everything from a range of
cereals and root crops to livestock, pigs and poultry. Furthermore value was added to many products
inside the farm gate and the marketing function was performed by the farm family who were involved in
selling products such as potatoes, vegetables, butter and eggs to a local market. While these activities
were generally confined to agricultural produce, they still required the farmer to engage in entrepreneurial
activities and farm families possessed significant entrepreneurial skills.
When Ireland joined the EEC in 1973 the Common Agricultural Policy (CAP) shaped a rapid change in
farming practices from one of producing a range of diversified products to one of specialisation. With
specialisation came structured markets and farmers became highly specialised producers, often at the
cost of developing marketing and other entrepreneurial skills. While specialisation, linked to scale, is the
way forward for many farm businesses, farm families will need to explore new income sources outside of
mainstream agricultural production. The percentage of farm households with an off-farm job declined
from 58% in 2007 to 51% in 2010 3 . The data also indicates that the value of off-farm work to farm
households has also declined over the 2007-2009 period. This reflects both the loss of employment and
cuts to the salaries of those with off-farm jobs. As all economic indications are that these trends are likely
to continue for some time, an increasing number of farm households will need to examine internal farm
and personal resources with a view to generating the income needed to meet future household needs.
1
Meredith, D. 2011, Farm Diversification in Ireland, Research Volume 6: Number 1, Spring 2011, ISSN 1649-8917, Teagasc, Ashdown, Dublin 15.
2
Department of Environment, Food and Rural Affairs, UK.
3
National Farm Survey, 2011, Teagasc.