From sector to farm
In November this year, Rabobank published a study on the growing contribution of side income to farm sales. They expect that stream to grow from 1.1 billion euros now to at least 3.4 billion in 2030. By then, ancillary income will amount to about 11-16 percent of total industry sales.
That side income is growing is clear. For some farmers it will even mean that secondary income will become the main source. An important observation made by Rabobank in this regard is that commercial activities in particular play a leading role. Some of these are activities on the farm for consumers such as a farm store, day care or care branch. Other activities such as energy generation are also aimed at the consumer market. Subsidies for nature management, among other things, will account for a smaller proportion of total sales.
"That side income is growing is clear. For some of the farmers, it will even mean that side income will become the main source."
Widening as a solution?
Side activities are obviously very interesting for farmers who see financial challenges ahead. Especially when income from the regular farm is declining, or a desired transition will (temporarily) cause less income, broadening is often looked at.
For the farmer who is making this consideration, there are two important cautions. The first is that the new branch you want to develop must be one that suits you. That sounds simple enough, yet I often ask the question at the kitchen table, "Why do you want a farm store or care branch if you actually have little need for many people in your yard?"
The second is that you yourself are not infinitely divisible. An extra activity takes extra time. Time that you have to put in yourself, or that you have to hire. And then a new activity can suddenly become a lot less interesting financially.
A new activity must not only be sustainable for people, planet and financially profitable for the farmer/entrepreneur. It must also be sustainable for the entrepreneur as a person, who must think carefully about whether a new activity fits with his own intrinsic motivation. After all, it is the farmer who ultimately has to pull the cart.
About Jeroen van IJzerloo
Jeroen van IJzerloo is managing director of Food Hub and a financial expert with De Nieuwe Boerenfamilie. He helps farmers, including in The Farmer Accelerator, to turn their dreams into a well-researched business model that enables them to move forward.