As the ground shifts: climate change and the future of farming

A woman and a man walking past farm buildings

For many businesses, climate change feels like something far off and distant. For farmers, it’s already a reality, impacting everything from their finances to day-to-day operations and even their future. Rather than shying away from the challenge, farmers are evolving their businesses at pace – but this impressive adaptability is a double-edged sword that means they may be outgrowing their insurance.

Across the UK, changing weather patterns are having a big impact on how farms operate. Flooding, droughts and hotter summers caused by climate change are having a knock-on effect on everything that makes a farm profitable, from crop yields to livestock feed^1,2. The Climate Change Committee has highlighted that these risks are already influencing a farmer’s ability to be productive^3,4.

The scale of the change is one thing, but farmers are reeling from the unpredictability, too⁵.

As Naomi Pine, Everywhen’s Agricultural Account Executive, explains, “We’re seeing more farmers needing to double-check what their insurance actually covers…storms and flooding weren’t always major concerns in some areas.” Risks that at one point felt unlikely are now becoming more relevant, and it’s easy to get caught out if cover hasn’t kept pace.

Some shifts are subtler. “There are more fire claims during harvest because of the hotter, drier weather,” she adds, which many farmers wouldn’t have expected to deal with in the past^6,7. Making sure rebuild costs, vehicle values and machinery are accurately covered has become important, too.

Farmers are adapting to survive

There was a time when farmers could generally rely on the rhythm of the land. Seasons weren’t as accurate as maths equations, but they were predictable enough – reliable enough.

That’s not the case anymore. Lower yields, changes in crop quality – like reduced protein levels in wheat – and the fact that there isn’t consistent feed available to livestock anymore is becoming more common^{8, 9 10}. As Naomi puts it, “the biggest impact we see is how weather is affecting farm income.” Last year was the driest spring recorded in over 130 years, and the hottest summer on record¹¹.

But the weather’s not just getting hotter. Early this year, some parts of England had 35% more rainfall than usual. It’s no wonder that hundreds of flood warnings were issued¹².

As income becomes less predictable, it puts pressure on the whole business.

Out of necessity, then, farmers are adapting – and they’re doing a great job. Many are diversifying what they grow, reconsidering numbers of livestock, and making practical changes to how their land works. Many farms, as a response to flooding, are investing in water storage and improved drainage systems to help them cope during times of drought and heavy rainfall¹³. It doesn’t stop there either – soil management techniques like cover crops and reduced tillage are being used more widely to protect their yields as the conditions are unpredictable^{14, 15}.

Other farmers are rethinking how their land is used altogether. Moving less productive areas into environmental or subsidy schemes or otherwise exploring alternative incomes is becoming the norm for farmers who want their business to survive^16,17.

Adapting means new risks

Farmers are clearly making lemonade from lemons, and that’s a great part of the story…but it’s not the end of the story.

Because as farms evolve, they become more complex. From an insurance perspective, farms used to be a single and clearly defined operation and now they can include a lot of different activities, from renewable energy and diversified crops to tourism and even rental income.

And with that comes new considerations. Naomi explains, “Insurance is definitely becoming more complex. As farms take on more diverse activities, they often need more specialist cover. A standard farm policy doesn’t always cut it anymore.”

Take renewable energy, for example. Solar panels or wind turbines can be a great source of additional income for farmers who need that extra revenue – but they also introduce different types of risk. As Naomi notes, “these bring a whole new set of risks that we didn’t see in traditional farming.”

The challenge is that these changes don’t usually happen all at once. These decisions are made gradually over time until the farm looks different.

And when the insurance lags behind, that can be a problem.

When farmers don't see the gaps

One of the most common issues farmers are facing as they try to adapt is that they don’t declare new activities.

They don’t do it intentionally, of course. Often, it’s because their new venture starts small and feels like a natural extension of the farm. But, as Naomi highlights, “new activities aren’t always declared to insurers,” and over time that can create a mismatch between the reality of the farm’s operations and what’s actually covered.

A similar challenge can arise when diversifications lead to more complex business structures. For ease, a farmer might set up their new business activities separately, whether as informal side ventures or under different business structures when they really need their own policies – or to be clearly linked back to their main cover – but what doesn’t always happen right away.

Or, let’s say a farm starts holiday letting or renting out an event space – that brings new responsibilities along with the new income. But public liability, health and safety, and protecting visitors may not – understandably – be the first thing farmers think about when these new activities are getting started on the farm. But over time, they can create big gaps in cover that leave farmers exposed.

Then you have the challenge of unfamiliar territory. As farms continue to diversify in order to survive, farmers find themselves taking on new roles as they step into hospitality, retail and energy. Because they don’t have experience in these sectors, it can be difficult to know what the right level of cover looks like – or what to ask for in the first place. As Naomi explains, “as farms adapt, more complex and specialist insurance cover is required.”

Because farms are having to adapt quickly, it can mean that gaps appear later on when an incident happens and it’s time to make a claim.

Don't wait to get ahead of the risk

If you want to understand why these gaps are important, first you need to understand the setting.

Take diversification, for example. Many farmers are investing heavily in diversification – and often borrowing to do so. For farmers, new sources of income aren’t just optional nice-to-haves, but an important part of keeping the business alive.

At the same time, as farms become more complex in order to survive, insurance often lags behind. With farmers having more on their plate than ever, it can be tough to keep cover aligned with present-day business activities.

That’s why it’s so important for farmers to regularly review their cover – before anything goes wrong, so you can be sure you’re protected no matter what.

Other planning considerations

Splitting the farm between multiple owners could increase the IHT relief as each owner gains their own tax‑free threshold; however, this can be complex and there is current uncertainty regarding whether this strategy will be viable under the new rules.

Alternatively, landowners may in some circumstances be able to pursue heritage status or, where location permits, designation as an area of outstanding natural beauty. These options come with strict criteria, such as ensuring public access, and will not be appropriate for most farms.

Speaking with your accountant or adviser now can also give you a clearer picture of whether your estate sits above the new threshold, especially as many APR claims have historically involved assets worth over £1 million. Taking time to review your situation now can help you adjust long‑term plans, make confident decisions and ensure your succession arrangements continue to support your family and your land for the years ahead.

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Farm Insurance

Farms are changing, which is why having the right guidance matters.

At Everywhen, we’ll work with you to tackle risks as they evolve and make sure your cover is there when you need it to be. If you want to know more, visit us or talk to a member of our friendly team on 01823 625503.

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