Case Study

Diversification - Commercial Letting

Jeremy is a director of Chamberlayne Farms Ltd, developers and owners of Steadings Business Centre.

The Chamberlayne family has been farming since the 1920s and has diversified their operations near Gloucester considerably over the last 25 years, running the Steadings Business Centre and three pubs, as well as generating renewable energy. The family has worked hard to make the most of the land that has been in the family for four generations and continue to run their arable and livestock farming business.

What made you decide to diversify?

In 1990 we started to research the possibility of turning our 1860 Victorian model farm buildings into premium office space. The attractive buildings were no longer fit for purpose as farm buildings and likely to become derelict if we didn’t come up with an alternative plan.

Income was the driving force. We decided to not only secure the future of the farm buildings by turning them into the business centre, but also take the opportunity to heat them using farm sources. It was a risky decision at the time as the interest rates were very high.

We installed a Farm 2,000 big bale boiler that would also take scrap wood, pallets and any organic material from around the farm, so the actual material costs were nothing. We replaced it a few years ago when there was Renewable Heat Incentive funding available to get the job done. It worked really well , providing all of the heating for the offices as well as three houses. The solar panels provide a third of annual electricity requirement. We don’t export during week days, only at weekends.

Did you get professional advice – finance, planning, business management, insurance for instance when you set it up?

Our high street bank declined to support the project, but another bank agreed after we commissioned a positive and professional feasibility study and it went ahead, despite the very high interest rates at the time. NFU Mutual has made a lot of difference to us too, they were also one of the first tenants and have given us lots of encouragement.

Our letting agent is one of our tenants, so we see him every day. My son is a director of the farm business and my second son is a financial advisor 

and specialises in renewable energy investment, solar farms, plastic to oil, and new battery storage development. This is a very exciting sector for us to be involved in.

Has diversifying worked out as you expected?

It got to the point that just as we were starting the construction work, interest rates were 10-13% and went up to 15% and then came Black Wednesday and interest rates fell right away. I had a feeling that we were confronting so many farming issues, mainly on grade three land, so it has overwhelmingly exceeded expectations in terms of asset value and income.

What is the paperwork like – rather a burden or not too different from the form-filling you have to do as a farmer?

Compared with farming I would say there is less paperwork. My brother has taken on the job of administration. My disabled son is able to do the crop management on computers and my grandson helps with IT wrinkles, so it is a team effort.

How does running a diversification enterprise alongside the farm affect family relationships?

We work on the formula that each family member needs a part to manage, whether that’s the farm, the business centre, the pubs or the renewable energy. Everybody has a role to play. It all works well and now our eldest grandson helps too.

What tips would you give to other farmers thinking of diversifying?

Think very hard about the sustainability of it economically, because it isn’t that easy to find returns and is very competitive. I would be looking for an 8% return on the money.

Seek out good advice and personalities you can get along with. As long as you do your homework, you should not be afraid of change. Farming is going to change anyway, so you should not have, as they say, all your eggs in one basket.

By farming you are not going to get a significant return in the future, but at the same time, you are always mindful that you are long-term custodians of the land. To reduce the amount of security that the bank retains, they were able to free up assets that gave us money to invest elsewhere.