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Diversification outwith Agriculture

Option closed to new applications


Diversification is a way of improving the viability of existing agricultural businesses, and of keeping farmers and their families within the sector even where the farm business does not provide sufficient income on its own.

What will this achieve

The aim of this measure is to encourage farmers and their families to set up or expand non-agricultural enterprises to complement or supplement their income from existing agricultural activities, with the intention of keeping the family within the rural community. It will also create employment opportunities, provide benefits and improve access to, or widen, the available range of services and facilities in the local community and beyond.

What you can do

Under this measure you can receive support for diversification into any non-agricultural enterprise where it can be shown that there is a demonstrable market for the proposed product or service and that you have, or can acquire, the skills and resources to provide these on a commercial basis.

Who can apply

Farmers and other members of the farm household, with exception of farm workers, actively involved in an agricultural activity at the time of application.

Eligibility criteria

You must be able to demonstrate a proven market for your proposals in your area, and to show that the diversified business will improve the household income stream and thus complement the farm business. Projects eligible for funding will include:

  • new or upgraded buildings or structures
  • changes in land use from agricultural to non-agricultural uses
  • the development or upgrading of services or other infrastructural elements
  • new machinery or equipment
  • the acquisition or development of information technology to help with the diversified enterprises
  • general costs related to professional fees (e.g. architects/engineers/consultants).

What costs could be supported

Operations eligible for support include:

  • provision of leisure, recreation and sporting facilities
  • retailing of processed agricultural products
  • processing of forest products
  • provision of other commercial services (illustrative list only):
  1. Commercial storage
  2. Farrier
  3. Gardening
  4. Sheep shearing/scanning
  • provision of or upgrading of existing tourism accommodation and conversion of redundant farm buildings into rent*

*Projects involving provision of tourist or residential letting accommodation must not include more than 20 bed spaces. Housing for rent will require a lease agreement of not less than 6 months. It does not include rent to a member of the immediate family of the eligible applicant or any of the employees of the eligible business. Development will have a recognised demand and be consistent with local housing strategies.

Note that provision of tourist accommodation is not subject to the 6 month minimum period specified above.

Energy and Heat from Renewable Sources

Eligible applicants may also apply for support towards the capital costs associated with the supply and sale of renewable energy and heat. There is no limit on energy capacity but projects designed mainly for own agricultural business consumption should apply through the appropriate Axis 1 option: Renewable Energy - Agriculture.

However, applicants need to be aware of the following:

Feed In Tariff (FITs)

As the FITs scheme was always intended to replace, not supplement, public grant schemes such as the SRDP, as the principal means of incentivising small scale, low-carbon electricity generation, the ability to receive a grant for a renewable energy installation and also benefit from the FIT is being phased out.

Until now generators have been allowed to benefit from both FITs and a grant from a public body where developments meet state aid de minimis requirements. However, the UK Government has introduced changes to ensure value for money for consumers by avoiding double counting (installations that receive both grants and FITs would be getting double benefit). It feels that if allowed to continue, the de minimis threshold would have the effect of making the combination of FITs and grants the rule rather than the exception.

As a result, the UK Government has introduced the Feed in Tariff Amendment Order 2011 which comes into effect from 30 May 2011. The Order states that the de minimis exemption will only apply where the grant has been made before 1st July 2011 for an installation that is first commissioned before 1st October 2011. All renewable installations installed and commissioned after those dates will not be able to benefit from a grant and be eligible for the Feed in Tariff. Therefore, if you decide to accept a grant, after 1st July 2011 you do so on the understanding that you will not be able to qualify for the Feed in Tariff.

This will not have any effect on installations that have already been accredited for FITS using the de minimis exemption.

Ultimately it is Ofgem who will determine whether installations are eligible for the FIT and applicants should contact Ofgem if they require further clarification on the eligibility of a proposed scheme.

Further information is available on Ofgem's website.

Applicants seeking funding for renewable energy under this option should also be aware that an Environmental Impact Assessment (EIA) is a likely precondition. This can be both expensive and time consuming. Applications should be planned with this is mind.

Renewable Heat Incentive (RHI)

You cannot receive a grant which contributes to the direct costs of an installation and receive the RHI.

However, if you installed equipment between 15 July 2009 and the date when the RHI regulations come into force then you will be given the option to pay back your grant and instead receive support under the RHI. This option only applies for equipment installed up to the time the RHI Regulations come into force (Summer 2011); after that time if you receive a grant which contributes to the direct costs of an installation you will not be eligible to apply for the RHI. Therefore, if you decide to accept the grant, you do so on the understanding that you will not be able to qualify for the RHI.








To ensure value for money we require you to provide 2 competitive quotes for any capital items applied for which are based on actual cost. If, however, you are seeking grant support towards something so specialised it is only available through 1 source then we would accept 1 quote. Please see the guidance on quotes and estimates for more information.

Rate of support

Subject to certain State Aid limitations the maximum amount of assistance for this measure will be a variable capital variable capital grant, dependent on requirement to allow the project to go ahead, with a ceiling of 50% of eligible costs.


You must complete the work as described in your approved proposal including compliance with any notified conditions of statutory consents. It is a condition of funding that you allow any person, duly authorised, to have access to allow an inspection to take place. An inspection may take place at any reasonable time either before or after completion.