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How do I diversify my croft?

Evidence suggests crofters are increasingly diversifying.

That’s according to the latest Scottish Government report on the economic condition of crofting.

Of course, crofting has long since been an important, and particularly sustainable, form of agriculture. It produces some of the UK’s finest produce. It’s also a crucial part of our cultural heritage — not least because of its intimate connection with Gaelic.

So why diversify?

Diversification has the potential to help crofters unlock higher sources of income to supplement more traditional activities.

In fact, the government report says there’s widespread agreement crofting is not viable without income from non-crofting activities. It adds the median annual revenue is £2,000.

Not only has this remained unchanged since 2014, but running costs have increased slightly.

As such, while there’s still a big place for the traditional crofting activities — raising livestock and growing crops remain the most common — it’s easy to see why the government report says the proportion that provides holiday accommodation increased from 8% in 2014 to 15% in 2018, while those offering leisure activities have increased from 3% to 7%.

Diversification is a way for crofters can supplement income from activities directly related to the croft, rather than having to work away in some other form of full or part-time employment.

Diversification

The good news is that crofters have more scope to diversify than tenant farmers.

A crofter’s duties include cultivating his or her croft. This doesn’t just include the agriculture side, but also involves horticulture, planting trees and using for woodland, as well as leaving fields fallow to promote flora and fauna, all in a managed way.

Plus, duties also include being able to put the croft to ‘another purposeful use’ which can cover almost anything if it doesn’t adversely affect the croft, the public interest, or that of the landlord or surrounding landowners.

No surprise then that these days we see crofts being used as a base for campsites and glamping locations, holiday lets, stables and riding schools, small commercial haulage firms, brewing and handcrafting luxury sheepskin goods.

How do I diversify my croft?

If you’re a tenant crofter and wish to put your croft to another purposeful use, you’ll need your landlord’s permission, or if that’s not forthcoming, the Crofting Commission’s. In my experience, having worked with crofters and landlords in the Highlands and Islands for several years, this is rarely refused.

If you are an owner-occupier crofter then no prior consent is needed. You’ll just have to ensure you continue to comply with your duties.

If you’re considering a diversified business it’s advisable to seek professional advice at the earliest possible opportunity. And that’s not just for any permissions you may need and other legal implications, but also to look at business structure, succession and tax planning.

It’s worth regularly reviewing these anyway but with diversification it’s particularly prudent because a switch in business emphasis might have unintended consequences.

The central theme here isn’t to bring an end to the important traditions of crofting, or small-scale Highland agriculture. Instead, it’s about embracing the future and the different ways in which crofts can provide meaningful income to people living locally — in turn contributing to the economy and helping secure the future of the croft itself.

Clever diversification can help a crofter thrive, not just survive, and as ever it’s best to seek advice from experts to keep things on the right tracks.

If you’re keen to read more, you can take a look at my posts on crofting law reform, common grazings and joint tenancies, funding and succession planning.

Gary Webster

Based in Inverness, parter Gary has extensive experience in the agricultural and rural sectors with a strong background in areas including agricultural tenancies, crofting law, rural business restructuring and succession.

Posted, 17 May 2021 by Gary Webster
Categories: Private client | Residential property | Rural