There is more to farm diversification than you might initially think. Use this guide from Agriculture Victoria to assist you as a landholder to make a diversification decision. These five steps can guide you in making a decision that will help you avoid failure and disappointment:

Compatibility

It is easier to act upon an idea that is highly compatible with what is already being done. It is harder to diversify into a completely new opportunity

Observability

The easier a product is to observe, the more knowledge and understanding you can obtain and this will increase your ability to make good decisions. A new industry will be less observable and there will be more risks

Trialing

Trying something out on a small scale to test it reduces the financial risk and helps you plan how to move into full-scale production and learn the production and marketing process.

Complexity

The more complex the idea the greater the changes needed to fit the idea into an existing system. As complexity increases, the risk of failure increases. As complexity increases, the need for, and the costs of gaining additional knowledge increases

Resource Advantage

Resource advantages can give your idea a better chance of succeeding. If you have a resource advantage for an idea then it will be cheaper, faster, or more efficient to adopt that idea compared with another idea