A quarter of farmers are officially living in poverty – with those on upland farms in the South West among the poorest. A report out today says the poorest are receiving relatively little support either from agricultural policies or the welfare state. The findings have been published by the soon-to-be-abolished Commission for Rural Communities – though to little surprise from farming organisations themselves.

The commission says many farmers are trapped in poverty and need Government help by way of business support and better access to benefits. But the picture it paints will be an all too familiar one to many farmers, particularly those struggling to make a living in moorland areas, where agriculture has traditionally relied on the highest levels of support.

Commission chairman Dr Stuart Burgess says even those households living below the official poverty threshold of £20,000 are often only surviving by capitalising on the business assets rather than on actual farm business profits.

"These struggling farms are likely to have grazing livestock and be located in upland areas. Many are left trapped in poverty without the resources or support to earn a living wage," he said. Most farming households now rely on diversifying and taking jobs off the farm in order to have a reasonable living standard.

Nearly two-thirds now have some form of off-farm income, and the latest figures suggest farmers now earn around £300 million a year from diversified activities. But, said Dr Burgess: "While many farmers have proved to be highly entrepreneurial, some do not have the skills or opportunity to diversify into new businesses.

"Tenant farmers can experience specific barriers to business development due to the fact that they do not own the land that they farm. They often find it difficult to access investment capital and tenancy agreements can prohibit certain business activities to avoid tax and inheritance implications for the landowner."

He said planning regulations could also be a barrier for those wanting to change the use of farm buildings to diversify their incomes, though the coalition Government's Homes on the Farm scheme, which encourages farmers to convert existing buildings into affordable housing, was a helpful step.

Even retirement posed problems for farming families, said Dr Burgess. "Because of business failure, retirement or ill health some farmers have no choice but to leave farming. However, inadequate pension provision and a lack of affordable housing can make this difficult," says the report.

In times of difficulty farmers could claim benefits but many found it difficult to provide the necessary evidence to access the benefits to which they are entitled. "For example, it can be difficult for tenant farmers to access housing benefits because tenancy agreements may not separate rental costs for the farmhouse and the land," said Dr Burgess. "Tackling poverty amongst farming households is long overdue. The government should actively promote farm business support and the take-up of income related benefits to eligible farming households."

National Farmers' Union South West spokesman Ian Johnson said the report made for gloomy but unsurprising reading. He said: "We do know there is a direct and close correlation between farm incomes and the Single Farm Payment. Farmers are still absolutely reliant on the payment to provide them with a living wage, and although the idea was that this would be a transitional payment to help them move into the real market it is clear that currently that market is just not operating properly, particularly in the dairy sector, when it comes to farmers.

"This report is highlighting a very serious malfunction and one that needs to be tackled – and born in mind by those charged with redrawing the Common Agricultural Policy."Mr Johnson said much of the current situation was the "dreadful legacy" of 13 years of rural policies being dictated by a government which had no interest in farming. He said: "It is a relief, at least, to now have a government which understands that farming is an industry like any other, but this is a change which has been very slow in coming."