Farm Diversification

Background

Chesterstone Farm is a mixed beef and arable farm extending to around 323ha (800 acres) located close to the village of Upper Largo in the East Neuk of Fife. It is farmed by Bill Clark with one full time farm worker and regular, casual workers. There is a small steading complex at Chesterstone (two cattle courts and old stable/cart shed buildings). Cropping consists mainly of combinable crops.

Why Diversify?

In common with many such businesses, the farm has experienced volatile product prices in recent years, together with rising costs. Much of the land farmed by the business is close to housing which puts extra pressure on farming operations such as spraying. The business has already diversified into agricultural contracting work as a means of defraying machinery costs. The business wished to generate more income and also build up the capital value of the farm. Opportunities to expand the scale of farming are limited due to price and availability of more land in the area. Therefore, further diversification offered the potential to achieve this objective. Chesterstone steading occupies a prominent position looking south across the Firth of Forth. The steading included two traditional farm buildings that were no longer functional for modern-day farming. Thus the business decided to explore possible alternative uses for these buildings.

Researching the Idea

A steading development into residential housing was discounted for various reasons by the family. The farm’s location and proximity to tourist and other attractions (for example there are 25 golf courses within 15 miles of the farm) lent itself to a tourist-based enterprise. Bill and Elma Clark researched self-catering holiday accommodation by visiting other providers, both locally and further afield, and seeking advice from VisitScotland on customer requirements, and marketing. As a result of this research the business decided to redevelop one of the old steading buildings into a self-catering holiday house. At the project planning stage it was decided to aim for a VisitScotland 4 star rating, but with a high specification (A 4 star rating was also the minimum level acceptable for the Scottish Executive's Farm Business Development Scheme (FBDS) grant applications, for which the Clarks wanted to apply).

Funding

The business successfully sought a FBDS grant for £30,000 in 2007. Other costs were met from personal funds.

Business Establishment

Planning permission was obtained in 2007/8 and the building conversion was finished in Spring 2009. As per the original concept, the house was designed and equipped to a high standard in order to attract customers. For instance, the interior was designed with the living areas upstairs in order to maximise the view. High specification television and audio systems were installed as well as a hot tub on the patio. The house was also designed to accommodate disabled guests. A website (www.chesterstonefarm.co.uk) was designed as well as brochures and cards. Arrangements were made with various tourist attractions and hotels in the area for these to be displayed. The house was also registered with a national agency and is also featured on the VisitScotland website. The house was also listed on other “free” websites. A 4 star rating from VisitScotland was achieved. Bill and Elma Clark, assisted by other family members, carry out the cleaning duties and handle the bookings and administration. At the end of the first year of trading an occupancy rate of 50% (26 weeks) has been achieved. This is above the national average.

Problems Encountered

The close proximity of the holiday house to the working steading (cattle housing) was recognised as a potential problem. Whilst guests are aware that the cottage is located on a working farm there is a risk that they may not be fully prepared for some of the work that is carried out. Careful planning of major operations, such as removing farmyard manure from the cattle buildings, helps to alleviate any such problems. Guests are allowed to look at the cattle, providing set guidelines (made available in the guest information packs) are followed. There were significant additional costs involved in adjusting the farm road access from the council road and in providing the electricity and upgrading the water supply to the house. The cashflow implications of having to make capital expenditure before claiming grants should also be factored into business plans. The “free” websites used for marketing the house have had mixed results. The Clarks advise that care should be taken in selecting sites or other IT services (for example internet search optimisation services) so that the desired level of service is provided.

Where the Business is Now

At the end of the first full year of trading the house achieved a 50% occupancy rate. This was ahead of forecast. As part of the strategy of providing additional benefits for guests, the Clarks can provide activities such as clay pigeon shooting and a small golf driving range on the farm. Further activities are planned. Through time, the Clarks hope to continue to increase occupancy rates through repeat visits and word of mouth referrals as well as through the other marketing activities. Encouraged by the success of the first house, in 2010 the Clarks successfully applied for a Scottish Rural Development Programme - Rural Priorities grant towards the cost of converting the other traditional building in the steading into a second holiday house. It is planned that this house will have an associated wind turbine to provide electricity for it and the other properties on the farm. The website and other marketing literature will continue to be updated on a regular basis.

Critical Success Factors

The location of the farm, with excellent views, and in a tourist area was a very important factor in the development of the enterprise. The Clarks’ attention to detail in project management and in providing a high quality service to customers is also an important aspect in the success of the venture. The ability to generate ideas (such as additional activities for guests) has also been important. Advice and support from specialist organisations was also useful, particularly at the planning stage.