Is agritourism the right diversification option for my farm?

Capacity Building
Written By Linda Tillman

Agritourism is an on-farm tourism experience that connects guests to farmers, their farming activities, and their produce. It leverages a farm’s assets: its produce, landscapes, views, creeks, buildings, farm animals, and farmer’s skills (such as in storytelling and educating).

For Bathurst, Oberon and Lithgow Councils west of Sydney, Tilma developed guides and case studies of local agritourism businesses to support agritourism development in the region.

To launch these guides, the Councils hosted events with expert presenters sharing valuable insights for farmers to consider as they develop or expand agritourism offerings on their farms:

The Councils’ tourism and economic development managers and planners also provided insights into visitation to the region, gaps (opportunities) in the region’s tourism offering, and how the Council planners want to help and support agritourism development.

Images: Linda presenting in Oberon; the agritourism development guide for Bathurst farmers, Sean presenting in Bathurst, Jaclyn presenting in Oberon, farmers attending the Bathurst event, Jacob presenting in Lithgow.

Following are some key learnings for farmers from their presentations. Some are specific to NSW’s planning legislation, but most insights are relevant for farmers across Australia.

 

The value of agritourism

Learnings from Sean Haylan, Destination Central West NSW

Tourism is an ever-growing industry, which has been growing at around 7% per year since 2011. It can be an easier way to earn an income from farm assets.

Reasons to add agritourism to a farm include:

  • Additional income, that can balance out the seasonal income of farming and enable a farm to stay in a family.

  • New jobs to replace off-farm jobs or for adult children.

  • Social connection for what can be an isolated job (farming).

  • Developing customers for direct produce sales, and fostering appreciation for farming.

  • Leveraging existing farm assets such as buildings for income.

 

Farmers should consider the needs of visitors as they develop an agritourism offering. Visitors to farms want to

  • Feel safe

  • Connect with nature

  • Experience authenticity

  • Buy sustainable experiences

  • Connect with farmers

  • Get close to the source (such as by buying the farm’s produce)

 

Consider how you might be able to phase your agritourism development over time, such as in the following timeframe.

Foundation (1-6 months)

  • Assess current farm assets - can you start for a lower investment using existing infrastructure?

  • Ask a planner, insurance broker, and your local and regional tourism organisations for advice as you develop your offering.

  • Test with family and friends for feedback and to finesse.

 

Development (6-18 months)

  • Finalise the experience offering you will offer guests.

  • Finalise pricing and set up a booking system

  • Create an online marketing presence (website, social media, Google Business Profile, ATDW listing)

  • Build a visitor feedback process (online reviews, surveys)

 

Growth (18+ months)

  • Develop collaborative partnerships with local tourism operators

  • Scale based on your capacity to grow and on demand

(This information about phased development is based on information provided by Sparrowly Group at a workshop delivered for Destination Central West.)


Taxation implications of adding agritourism to a farm business

Learnings from Andrew Kelly, Kenny Spring Solicitors

Note: This information is intended to be general in nature and is not intended to be professional advice. Readers should seek professional advice in relation to any specific matter.

The main taxation considerations of adding agritourism to a farm are:

Three types of tax implications, outlined in the text below

NSW Land Tax exemption

Adding an agritourism business onto your land may change the dominant use of the land. To be eligible for land tax exemption, primary production must be the dominant use of your land.

Factors that may influence whether you are eligible for land tax exemption include:

  • The nature and intensity of the agritourism use compared to the farm use

  • The amount of physical area of the land over which the business is conducted

  • The amount of money spent, assets deployed, and time and labour spent on each use

  • The actual or expected level of income from each use

Factors that can help maintain primary production exemptions include:

  • Conducting an initial review before commencing agritourism with a land tax specialist lawyer and your accountant.

  • Maintaining good records of primary production expenditure and investments and those of non-primary-production uses.

  • Subdividing land to separate non-farm activities from farming activities, if the revenue from non-farming activities is likely to be greater than farm activities.

Loss of primary production exemption shouldn’t deter you from considering agritourism. Adding agritourism is a commercial decision, and you should weigh the cost of any tax that may be imposed or succession planning options against the earnings of the agritourism business.

If you are looking to maintain a primary production exemption it is important to regularly review your circumstances and tax position.

 

Small Business Capital Gains Tax concession

Ensuring your activity meets the requirements of carrying on a business will enable you to remain eligible for CGT concessions. You’re more likely to have business income if:

  • You intend the agritourism activity to be a business

  • The activity has a profit-making purpose

  • The activity is repeated and regular

  • The activity has a certain scale (more than just a hobby)

  • You keep records as any normal business does

Farm stay accommodation is more likely to be considered rental income than business income, though it depends on whether the farm stay use for the land will become the main use of the land. It is possible to retain Small Business Capital Gains Tax Concession eligibility even if the main use of your land becomes farm stays. Proper planning and advice should be taken regularly.

 

Transfer Duty exemption

The transfer duty exemption for primary production land to family members (or entities that they direct) is connected with your primary production land tax exemption. The loss of exemption can impact succession planning options. The loss of a primary production exemption may lead to the person receiving the land to claim the transfer duty exemption.

 

How a planning consultant can support your agritourism development

Learnings from Jaclyn Burns, Burns Planning and Development

Planning consultants help business to navigating complex land use regulations and associated Council policies. They ensure projects comply with zoning laws, planning policies, and environmental standards. They help design, prepare, lodge required applications with Council, taking your ideas and putting them in a format that Council can accept. This helps reduce compliance risks and makes the approval process more efficient by reducing delays.

While using a planning consultant isn’t compulsory, similar to using an accountant or a financial advisor, it’s a way to get good advice on a complex issue that can save you time and money. They are like interpreters—fluent in English and planning-speak. (If Council recommends that you speak to a planning consultant, that can be interpreted as, “This is going to get complicated.”)

While Council planning officers will try to be helpful, they’re also the ones who have to assess your development. So there’s a potential conflict of interest. Council will provide you with information on the requirements that need to be met, a planning consultant works for you, working with you to find the best fit for your needs, your property, the environment, and your neighbours.

A planner can help you

  • Think through and come up with ideas for your agritourism offering with you to find the best fit between your site and your goals. They can go to your farm, look at your site and see what will and won’t work before you commit to a project.

  • Spot risks and compliance costs before you spend money

  • Advise you on what planning provisions can be negotiated, and which cannot, and provide workable alternatives

  • Advise what will work or what could be problematic

  • Advise what might be potential constraints of the site or what would be expensive to address

  • Talk through options for which approval pathway would work best for you.

  • Recommend quality suppliers when required for a DA: engineers, bushfire experts, traffic consultants, draftspeople

  • Take the fear out of the equation and place all the cards on the table to allow you to make the best informed decision.

  • Save your sanity!


Although NSW provides a fast-track Complying Development Certificate for a development, it can be difficult to meet all of its requirements, and Development Approvals are more flexible. People often want to avoid a DA, but it can be the best option for agritourism developments.

Special tip: Don’t wing it (i.e. don’ t develop an agritourism offering without being compliant with relevant legislation.) Don’t assume you can seek forgiveness later – it is now extremely difficult in NSW to apply for retroactive approval, and the consequences of not being compliant are significant. Trying to avoid Council approval isn’t the shortcut it may seem to be. Sustainable, compliant business growth is always the better option.

Hot topic: On-farm weddings

Many farmers wonder if they can rent out their shearing shed as a wedding venue, but weddings are one of the most complex forms of agritourism to develop. You’re dealing with a range of differing legislation,  environmental planning instruments and planning policy.

Some of the issues that need to be addressed are:

  • Wastewater management

  • Bushfire safety

  • Noise management (to not impact neighbours)

  • Water quality

  • Access for people with disability

  • Food safety

  • Building Code compliance

  • Traffic on the road caused by attendees

  • Parking

  • Waste management

  • (and keeping neighbours on-side)

That doesn’t mean it’s impossible! But you could start by dipping a toe in the water with:

  • Micro weddings

  • Marquee events

  • Holding ceremonies in your garden.

Slow and steady growth to build momentum may be more sustainable than a grand development that requires considerable financial resources.

 

Finding affordable insurance for agritourism

Learnings from Jacob Bruce of Nutrien Ag Solutions

Adding agritourism to your farm can impact your insurance cover. Agritourism is not always automatically covered by your farm pack insurance, as farm insurance policies are designed to cover farming operations.

Disclosure is critical: Always disclose any changes to your farming operation to your insurance broker to maintain insurance cover for everything happening on your property. Your agritourism activities may need a separate commercial public liability insurance.

 

Some of the things that can impact insurance provision include:

  • Turnover from agritourism activities

  • The maximum number of guests per night

  • Guest involvement in farming activities (there are exclusions  to these in a farm pack)

  • Food and alcohol provision – farm packs don’t cover cooking for guests or serving alcohol

  • Hosting of events and maximum numbers of guests at events

Different insurers have different risk appetites, so it’s important to ensure your insurer aligns with your specific business model when it comes to agritourism. For example, here you can see that one insurer is happy to insure up to 20 guests staying on the property, while two others only will insure up to 10 guests.

A table showing how three insurance providers have different levels of risk appetite for different agritourism activities

To secure affordable insurance, avoid offering risky activities such as:

  • Selling alcohol

  • Horse riding

  • Hunting

  • Animal petting

  • Large events

….and reduce risk, such as with:

  • A written risk management plan, and an annual risk review with your insurance broker.

  • Safety measures such as smoke alarms and fire extinguishers, secure fencing, restricting access to animals and heavy machinery, and not allowing guests to drive any farm vehicles.

  • Emergency preparedness, such as having a first aid kit and first aid training, and established evacuation routes.
     

Learning from a successful agritourism start-up

Learnings from Jill O’Grady of RedGround Australia

RedGround Australia was designed to be a world class truffle destination for people to experience premium truffles.

The business has 7 pillars:

  1. Truffles: exported, sold to high end restaurants in Sydney, and sold at the farm in the farm’s retail shop.

  2. Agritourism: truffle hunts and farm tours (the farm grows 4 types of truffles enable year round truffle hunting), truffle tasting experiences.

  3. Accommodation: a private on-farm guesthouse.

  4. Function centre: on-farm event hosting, and workshops such as cooking classes.

  5. Retail line: truffle condiments, tools, and merchandise, sold on the farm.

  6. Sustainability: restoring the farm’s endangered ecological community, and reducing energy and water use. Customers and tourists want to buy from sustainable businesses.

  7. Community: gifting RedGround experiences for use by local charities to raise funds.

 

To grow quickly, Jill of RedGround took advantage of a range of business development support:

  • A free agritourism workshop by Destination Central West NSW (her regional tourism organisation)

  • Free tourism training from Destination NSW’s NSW First program

  • Free digital training from Tourism Tribe’s Digital Academy (funded by Destination NSW)

  • Free business mentoring from Service NSW on a range of skills such as website building and exporting

  • Hosting familiarisation tours of tour operators and travel agents arranged by Destination NSW.

  • Sustainability training from EarthCheck and accreditation from Ecotourism Australia.

  • Participation in the Australian Tourism Exchange (ATE) to sell to international travel agents and tour operators.

 

Learn more

Learn more about getting started in agritourism in our recent webinar and article.

Free upcoming webinar

Learn directly from these experts in our upcoming webinar ‘Is agritourism the right diversification option for my farm?’ on 30 October. Learn more and register here.

Linda Tillman
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Getting started in agritourism