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New advice on diversification for tenant farmers in Scotland

Diversified garden centre

Scottish tenant farmers who are planning to diversify into areas such as tourism or renewable energy can now get advice on their rights from a new guide.

Published today by the Tenant Farming Commissioner, the guide looks at what tenant farmers need to do when they’re planning to diversify.

Already more than half of farms in Scotland have diversified into areas ranging from camp sites and glamping pods, to wind turbines and farm shops – and the trend is set to continue as farmers look for ways to enhance their livelihoods.

Those farms with some form of diversification generate significantly more income each year than those that don’t, according to the Scottish Government Farm Business Income Estimates report (2017-18).

In Scotland, provided tenant farmers follow the correct procedures and get their landlord’s consent to their plans, there is no limit on the amount of the holding that can be used for diversification. The law sets out a clear timetable, summarised in the guide, for any tenant farmer seeking to get their landlord’s permission to diversify part – or all – of their holding.

Tenants must send a formal ‘notice of diversification’ to their landlord, although an initial informal discussion is often the best way to kick start the process, enabling both parties to agree on how the project should proceed.

The new guide also sets out what should happen at the end of the lease. Diversification may have increased the value of the holding and in these cases, provided the correct process has been followed, compensation may be due to the tenant. Equally the landlord may be entitled to compensation, if the value of the land has been reduced by the diversification.

However, the right to compensation may not apply if the diversification is such that the land cannot be used for agriculture by an incoming tenant.

Speaking about the new guide, Bob McIntosh, Tenant Farming Commissioner, said:

“More and more farmers are set to diversify, as agricultural subsidies decline post-Brexit. I expect that another driver will be climate change, as farmers seek more innovative uses for land.

“Diversifying can be profitable and straightforward – provided tenants and landlords agree the scope of the diversification up front and follow the correct process. Diversification can help to protect the viability of farms and livelihoods.”

The Diversification Guide can be found at this link.