FARMERS are increasingly using their land for horse riding, farm shops and golf courses in an effort to stave off the harsh economic climate affecting the industry, a report has said.

Competition from traders producing foodstuffs more cheaply abroad has placed arable and livestock farmers under increasing pressure.

In the North-East and Yorkshire alone, more than 6,900 farmers are diversifying into non-food businesses such as horse-riding, farm shops and tourism.

A survey by the Department for the Environment, Food and Rural Affairs (Defra) shows that, on average, farmers are earning £1,800 a year from these activities and, in total, £100m across England.

The survey found that in the North-East and Yorkshire and Humberside, more than 500 farmers have diversified into sport and recreation, more than 600 are operating tourist ventures and more than 500 are involved in processing and retailing.

The report, released today, shows that more farmers than ever before are diversifying to earn extra income.

The Farm Business Survey shows that in England, diversification earnings have passed the £100m mark for the first time, and that:

* Fifty-six per cent of full-time farmers have diversified;

* Average earnings in 2001/2002 from diversification were £1,800 per farm, up 30 per cent on the previous year;

* 1,800 earn more than £50,000 a year from diversification;

* 3,600 farms earned between £20,000 and £50,000.

The news comes as Defra studies show farmers' incomes are at their highest level since 1997, following the third annual increase in succession.

Total UK income from farming rose by 32 per cent last year to £3.2bn compared to £2.49bn in 2002, Defra said.

Lord Whitty, Food and Farming Minister, said: "This increase in incomes is good news, especially when the increasing levels of diversification by farmers into other activities is taken into account.

"We need competitive farmers and food producers. Government investment will continue to help them to improve performance, and we are working together to lay the foundations for a sustainable and profitable future for the rural economy."

The National Farmers Union said: "The need to explore new market opportunities is an increasingly important part of maintaining a profitable farming business.

"The figures from Defra show that successful diversification can bring real financial benefits to the farming community.

"Having said that, it is not necessarily an easy option and, as is the case with any new business, it requires a lot of commitment and hard work. There are also recognised barriers to success - not least, access to grants and stringent planning laws.

"With this in mind, the NFU is working with local and regional planners to ensure that farm diversification plans are treated sympathetically, with a minimum of red tape."