41% of all farms already have an additional source of income and on small farms, an additional source of income is especially important. Agricultural contracting, where a farmer utilises his spare time and existing machinery to work on another farm, has grown in recent years. In many cases this has developed to the point where additional staff are employed and machinery purchased specifically to do contracting work. Involvement is reported on 37% of diversified farms. The remainder of diversified activities include on-farm processing and sales, reported on nearly 27% of diversified holdings. This "added value" type of enterprise is thought to have been a major growth area over the last 10 years. 17.5% of diversified holdings create speciality products. A remaining "miscellaneous" figure of nearly 13% covers all other enterprises that do not fall into the above categories. The speciality products area has seen growth over the last 10 years as can be seen through the success of groups such as "Taste of the West" which have created important food links between producers and processors, and generated ancillary employment. A study by the University of Exeter found on average, just under 1.5 diversified enterprises per farm. This ranged from 65% with one alternative enterprise to 2% with 4 or more.
Regionally specific information relating to incomes from off-farm employment and self-employment is not available. However, national figures for 1996/97 year are available. These exclude contribution from household members other than the farmer and spouse and also exclude those farms classed as part-time. It is likely that other income sources are already highly significant to these excluded farm businesses. Research into off-farm employment identifies from 20% to over 60% of farm households with full-time or part-time off-farm employment. Official estimates (which include only the farmer and spouse on full-time farms) suggest about 25% of farms in England currently generate an average of £2,400 income per annum from this source. Off-farm employment has unsurprisingly been shown to be strongly associated with access to labour markets and therefore is likely to be far more prevalent in urban fringes than in remote upland and lowland areas. However, these sources make a very significant financial contribution to the farm business. Over a third of farms with off-farm employment generated in excess of £10,000 per farm per annum.
This source of additional income is one of the most accessible for many farm businesses, especially small ones without adequate capital resources to diversify on-farm. Opportunities vary significantly according to farm location, accessibility and strength of suitable labour markets. In addition, off-farm working may be constrained by on-farm work practices which vary according to farm type (e.g. milking dairy cows may limit off-farm working whereas seasonal arable operations may be more compatible). In many cases farm household members may not have the necessary skills, qualifications or confidence to seek off-farm jobs and there is clearly a need to tackle this issue to enhance social and economic opportunity.
One in four farms are already involved in some form of tourism in the West Country compared with one in seven nationally. The importance of tourism increases further west and into the upland areas of the Region. Indications are that many more farmers are considering further involvement, and there is potential for greater collaborative efforts. Only 50% of farms provide all-year-round accommodation and there is a need to improve quality standards and co-operative marketing/support networks.
Accommodation and leisure provision is one of the largest sectors in diversified farm business in this Region, with 51% of diversified farms being involved in activities including: bed and breakfast; self-catering accommodation; camp sites. Touring caravans and tents provide 39% of bed spaces; adding self-catering and B&B sectors, the figure is 53%, much of which is on farms. Farmhouses form about 12% of the Region's serviced accommodation stock, whilst self-catering on farms represents 23% of such accommodation in the Region. This sector is clearly of major significance to the rural economy of the South West.
The contribution of these accommodation and recreation facilities to farm business income is extremely varied depending on the type and scale of activity and occupancy rates/visitor numbers. Net profits of hundreds of thousands of pounds per annum for very large facilities are not unknown, but the overwhelming majority realise a much lower contribution to their farm incomes, with an average of about £2000-£4000 net profit per annum. Many achieve significantly lower levels than this, especially those providing recreational facilities. A University of Exeter study estimated that over 10% of visitor service providers achieved net profits of less than zero, indicating that the necessary knowledge and skills are lacking. Objective 5b funding has nevertheless raised quality in these facilities and generated employment.