Barriers to diversification

This report covers a project funded by Our Land and Water, to investigate the challenges faced by landowners when they seek to diversify via land use change. The project itself involved interactions with 11 farmers within the Waikato who were investigating various options for land use change on their properties. This involved three workshops with the participants where a range of issues were discussed:

– Options available.
– The need for good due diligence.
– Access to information, especially financial.
– The challenges and barriers participants came up against and how they approached these.

The four key motivations for diversifying were identified as (in order):

1. Financial gain
2. Desire to try something new
3. Reduce environmental footprint
4. Part of succession planning

Participants were asked to identify their top supporting partners in progressing their diversification plans. These changed throughout the project, with the top five identified at the end of the programme as (in order):

1. Agribusiness consultants
2. Supply/industry corporates
3. Banks
4. Other farmers
5. Accountants

The key barriers identified to progressing diversification plans were (in order):

1. Skills/human capital
2. Physical limitations/resources
3. Production uncertainty
4. Set-up capital
5. Lack of information

Participants were also asked to identify the main disadvantages they felt or experienced in endeavouring to diversify. These were identified as (in order):

1. Time involved establishing a new enterprise
2. Increased debt
3. Pressure to run two or more operations