Head of rural business Geoff Tomlinson, of Preston-based law firm Napthens, said that farmers were experiencing rising milk prices and booming agricultural land values.

He said that many people were also diversifying by carrying out contract work or working for larger farms.

Mr Tomlinson said: "While the cost of running a business, such as fuel and fertiliser costs are increasing for all those in the sector, there are several positive signs that we are moving into a period of improved economic growth.

"Milk prices are up, which is benefiting farmers, but obviously the associated costs of running a business are also increasing.

"The situation may not be as rosy as we were hoping for three or four months ago, but it is certainly not all doom and gloom."

He said the situation was similar to the foot-and-mouth crisis when farmers were forced to diversify with small rural businesses.

On top of these successes, farm land has risen from around £4,000 an acre a year ago to nearer £7,000 an acre.