The research problem – how to make the best economic diversification decision. It was analyzed in 12 cases – diversified farmer’s farm. It was found that the farm diversification decision was taken usually considering only one possible alternative solution. There was not carried out a complex farm diversification decision alternatives assessment analysis. Decision maker, subject only to those factors which it considered relevant, took the decision. Economy diversification decision was taken in haste. As a result, decision-makers have suffered many losses they had to make an additional investment, to study and to consult. This paper presents proposals to accept supposedly, best farm diversification decision.

Depressive nature of the rural areas development increases the risks of economic security of Ukraine in the space-regional dimension. The diversify economic activity is a strategic tool for minimization of these risks. The purpose of research is the development of priority areas of the diversification of economic activities in rural areas in the context of minimizing the economic security risks. The methodology of research is formed on the basis of such methods as system analysis, synthesis, scientific abstraction, statistical classification, project and organizational method. In the paper the correlation between the diversification of economic activities in rural areas and minimization of economic security risks is analyzed. The author estimates the level of diversification of agricultural production. The growth of rural employment, increase of revenues to local budgets, the formation of added value, improvement and development of human capital, reducing human pressure on natural ecosystems are considered to be the incentives to promote diversification of economic activity. The author proposes the priority areas for diversification of economic activities in rural areas, including the development of rural ecotourism, timber and woodwork industry, fishery, services and trade, alternative energy.

The activities of agriculture enterprises are those referred to the riskiest types of entrepreneurship, because there exists certain dependence on the risks of production activities and market risks, especially marketing and price risks, each of the above mentioned has its own specific manifestation and impact on the company value in this sector. The aim of the study is to study the origins of the market risks emergence and their impact on the cost of agribusinesses in the new business environment. Farmers do not normally pay attention to market risks and do not analyze the types of products that increase their company value. This problem can be solved by using the ABC-analysis of the agricultural product mix, the “sales as contribution to reimbursement” analysis, the introduction of a restricting system on the use of valuable natural resources and diversification. The use of economic and mathematical methods allows us to find a rational production structure of an agricultural enterprise, to calculate the optimal structure of its crop area or an area of a separate group of agricultural crops.

Agrifood fairs contribute to the conservation and upgrade of rural heritage, support the marketing of traditional agricultural products by small agrifood producers and to the diversification of rural activities such as the promotion of rural tourism activities. This paper focuses on the analysis of relationship between the motivation to attend an agrifood fair as a contribution to rural development, and the buyers’ wishes. The two-way dependence between the items to be explained, motivation to attend, and the explanatory items was calculated by means of a chi-squared (χ 2 ) test of significance between the items. Clusters of similar conduct have been defined in order to optimise the managerial and public policies, to get the maximum advantage of the agrifood fairs. Three clusters were obtained i) local inhabitants motivated by tradition that return to the fair and sometimes they needed to be reminded by Tourist or Council Information and gave an excellent valorisation of foodstuffs ii) tourists motivated by accident or recommendation which agree with the price although their valorisation is regular or good and iii) people interested in traditional foodstuffs that used to return to agrifood fairs and knew of the fair by press or recommendation, gave a very good valorisation to the foodstuffs and agree with the price.

The present research focuses on applications for assigning the farm model and determination for the direction of the share of Zemgale subregions. Rural area farm models were created based on the criteria of experts and focus group study results. The developed three models showed that the sub-section of small, medium-size, and large farms have a different share of income by type of activity. Agriculture is the main source of income in the farm models of Zemgale subregions; however, the income level differs by the groups of farms – the larger the farm, the larger the share of income comes from agriculture. Farms of Zemgale-1 and Zemgale-2 subregions are frequently engaged in the same sectors; though the implementation types differ, for example, tourism in Zemgale-1 subregion is based on culture - historic tourism, while recreational and sport tourism dominates in Zemgale-2 subregion.

The paper presents the research results on theoretical aspects of business diversification on farms, analysing the theoretical evolution of terms and concepts related business diversification, diversification etc. The aim of the research was to describe and analyse the theoretical aspects of business diversification on farms. The monographic, analysis and synthesis, and comparable methods were applied in the present research. According to the research, it is concluded that the terminologies used in relation to business diversification are different; each terminology includes significant elements for rural business diversification. Yet, the authors developed their own definition for rural business diversification, thus creating a new scientifically significant term to characterise economic processes.

We model the possibilities to apply a portfolio theory in the risk management of business units. As corporation become large-scale, in order to manage such structures, it is necessary to apply the portfolio theory and asses diversification level in such structure.