Farmers increasingly rely on outside income to make a living, warns a rural fund founded by Prince Charles.

Fewer than one in five family farms are making a profit from farming, according to research undertaken by the Andersons Centre on behalf of the Prince's Countryside Fund.

The average farm loses more than £20,000 a year from farming activities, it says.

Instead of agriculture, farms are increasingly reliant on other income streams to make a profit.

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The shortfall was made up by income from non-farming activity, such as tourism, renewable energy and direct sales.

Farmers are increasingly reliant on income from working off farm as well as subsidies, according to 172 participants in the first year of the Prince’s Farm Resilience Programme.

Countryside fund chairman Lord Curry of Kirkharle said: "Farmers are proactively looking for how they can generate an income from diversified sources to remain profitable.

Improve skills

"This is more crucial now than ever. Farmers must develop their skills and improve their business confidence to survive.

"If they do not, the risk of extinction for the family farm is very real.

"Farmers must act now to both strengthen their core farming business and to spread the risk.

The Andersons Centre has developed a Business Health Check Tool for the Prince’s Farm Resilience Programme.

It allows farmers to benchmark their performance, identify their strengths and weaknesses, and make informed business decisions as a result.

The Prince’s Farm Resilience Programme aims to help 300 family farms annually.

Local networks

It is bringing together like-minded family farm enterprises in local networks to review their current activity and identify ways to build resilience.

The programme effectively helps farmers to take control of their businesses.

Farmers who took part in the first year have confirmed they have higher levels of confidence in their business, better business management, and stronger communication within their family.

Lord Curry said: “The Prince’s Farm Resilience Programme is vital, because it equips farmers with the tools they need to remain financially stable.

"Maintaining diversity of farm size is essential to protect the British countryside and our rural communities.”

For details about the fund, click here.