It launched a consultation asking whether Net Farm Income was the best way of calculating the health of the farming sector, and the alternatives available. Farm income measuring is used in representations to the Government, and by Government in setting policy.

At the aggregate level, the Total Income from Farming (TIFF) method of calculation is used, compiled from various national sources.

When measuring income, farming business is broken down into four ‘cost centres’:

• Agricultural Production and Agricultural Contract Work

• AgriEnvironmental Activity

• the Single Payment Scheme

• Non-Agricultural Diversification.

It is the definition of diversification that gives Defra most concern. Under the current NFI and TIFF schemes, so-called ‘separable’ diversifications – those using farm resources such as land, building and machinery – is excluded. This amounts to almost a quarter of diversified output. Defra puts the figure at £135million from 2003 figures. This amounts to 1.2 per cent of farm business and 6.2 per cent of net profit, it says.

Source: farmersguardian.com