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Investing in On-Farm Infrastructure: A Smarter Route to Farm Growth

In today’s challenging agricultural landscape, growth is no longer guaranteed by simply buying more land.

With rising land prices and shrinking margins, farmers are increasingly exploring alternative strategies to secure profitability and resilience. One approach gaining traction is investing in on-farm infrastructure to support enterprise diversification. Rather than expanding acreage, forward-thinking arable businesses are adding complementary enterprises—such as poultry or beef finishing—to spread risk, improve returns, and strengthen long-term sustainability.

Why Buying Land Alone Doesn’t Stack Up 

For generations, land ownership has been seen as one of the ultimate markers of success in farming and a natural route to scale a farm business. However, at current prices, purchasing arable land at £12k per acre could cost £2.4m for a modest expansion. Financing that at 6% interest equates to £144k annually—before factoring in operating costs. With a gross margin of £400 per acre, the numbers do not stack up. In short, borrowing to buy land seldom delivers a viable return unless it’s part of a much larger, long-term strategy. 

While land ownership does offer balance sheet value and future security, its short and medium-term contribution to business profit can be limited unless it is fully optimised with high yielding crops, reliable market access and operational efficiency. For businesses seeking growth and profitability, investing in other productive infrastructure for enterprise diversification often makes more financial sense. 

The Case for Enterprise Diversification

Diversification within farming—not into tourism or retail, but into complementary agricultural enterprises—can transform a business.

  1. Stronger returns: Adding livestock units such as poultry sheds or beef finishing facilities creates new income streams while leveraging existing resources. For example, a poultry unit may require significant upfront investment—potentially up to £6m—but can generate operating returns approaching £1.2m annually before finance costs of say £360k. Compared to land purchases, the potential for quicker, stronger returns is clear.
  2. Risk management: Beyond profitability, diversification spreads risk. Arable farms exposed solely to combinable crop price volatility can buffer themselves by adding enterprises that respond differently to market pressures. Livestock and poultry operations, for instance, often benefit when grain prices fall, while arable margins improve when feed costs rise. This interplay creates a natural hedge against market fluctuations.
  3. Complementary Benefits: Livestock enterprises produce valuable manure, reducing fertiliser costs and improving soil health—boosting the performance of arable crops. Similarly, farms growing their own cereals can supply feed for poultry or pigs, reducing exposure to external price swings. These synergies strengthen resilience and enhance overall efficiency.

Opportunities in Poultry and Beyond 

Current market dynamics favour poultry enterprises. Stocking rate changes mean additional capacity is needed for broilers, creating openings for new entrants. Free-range egg production also offers potential, with several million bird places required to meet welfare commitments. However, timing is critical: opportunities may narrow as capacity catches up with demand, so businesses considering investment should act decisively and quickly. 

Other sectors, such as pigs and beef finishing, increasingly operate on contract systems, reducing the risk for farmers while providing steady income. These models allow producers to benefit from diversification without bearing the full burden of feed costs or market volatility. 

Infrastructure investment: Risks and Realities

Infrastructure investment is not without challenges.  

  1. Planning hurdles: The planning system is one of the biggest challenges facing infrastructure investment. Farming businesses frequently encounter delays, uncertainty, and restrictive conditions when applying for permissions. If the planning process can become more enabling, rather than obstructive, it is likely that many more businesses would invest.
  2. Access to Funding: High capital costs demand robust financial planning and access to credit. It is essential that any investment is supported by a thorough financial business plan, including cashflow forecasting, profitability analysis and a clear understanding of the capital requirements. Security can also be an issue, as buildings often hold lower collateral value than their construction cost.
  3. Labour and management complexity: New enterprises require skilled staff and strong operational oversight, particularly for businesses unfamiliar with livestock operations.
  4. Market volatility and disease risks: Issues such as avian influenza add complexity. Mitigation strategies include securing long-term supply contracts, fixing interest rates where possible, and ensuring proximity to processors and packers. 

For those willing to navigate these hurdles, the rewards can be substantial. 

Building for the Future

Now Basic Payments are essentially removed and pressure mounts on traditional arable margins, the case for investing in on-farm infrastructure has never been stronger. Diversifying through complementary enterprises offers farmers a route to growth that is both profitable and resilient. While buying land may still have a place in long-term strategies, it rarely delivers immediate returns. For businesses prepared to embrace change, the future lies not in more acres, but in well-planned infrastructure investment that unlocks new income streams, spreads risk and create synergies that strengthen the entire farming system. 

Greg Riketts - GSC Grays

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Greg Ricketts
Director

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