ECONOMIC DIVERSIFICATION ON SMALL AGRICULTURAL HOLDINGS

In Latvia, small agricultural holdings comprise a very high proportion of the total agricultural holdings - 90 %. However, their number decreases, which is caused by a decline in their competitiveness and insufficient cash flow. Nevertheless, such holdings play an essential role in rural development in Latvia. One of the main problems to be tackled is the identification of new business paths for the holdings, i.e. their business diversification. The research aim is to identify prerequisites for economic diversification for small agricultural holdings in North Kurzeme. The research revealed that small agricultural holdings used mainly their own funds and less relied on external finance, which could be a hindering factor for their development. In the opinion of agricultural holding owners, the diversification of their holdings is strongly associated with consumer purchasing power, and higher profits have to be the result of the diversification.