UPPER Wensleydale's economy fell by an estimated 20pc in the last five years, according to a report on sales incomes in the area.

The report, by Hawes resident Dr Peter Annison, says the upper dale had experienced a drop in total income of between £3m and £4m since 1995-96.

Most of this was due to a fall of 41pc in farm sales income in Wensleydale and neighbouring Swaledale, together with a drop of an estimated £400,000 to £750,000 in income from staying tourists.

Falling milk prices alone accounted for a decrease of up to £1.6m in farm incomes and turnover at Hawes auction mart fell from £11m to £6m in the last three years, said the report, to be tabled at Richmondshire business forum on Monday. The mart situation reflected the drop in livestock prices rather than a fall in the numbers of stock through the sales ring, said Dr Annison.

Light manufacturing in the dale suffered with the closure of Weatheralds Construction, which led to almost 50 job losses and negated the success of the Hawes creamery and Weatheralds woodturning.

Export services was a very small but growing sector and contributed about £500,000 to the local economy.

Dr Annison concluded that the success of continuing farm diversification depended largely on a vibrant community, which did not appear to exist in the upper dale.

There was evidence that attempts to boost farm income by letting holiday cottages merely spread the visitors - and their cash - more thinly, rather than attracting new money to the area.

A report by Mr Geoff Herbert, economic development officer, echoed Dr Annison's view that the way forward for farmers wishing to diversify was to develop the core business of agriculture by working on supply chains, adding value and a reduction in food miles. He said diversification into tourism accommodation was nearing capacity.

He recommended Dr Annison's findings be fed into the community investment prospectus, which forms the basis for bids for European and other grant aid, to help identify measures to reverse the downward economic trend.