The issue of diversification of farms (agricultural holdings) is very complicated in the Polish legal system. The basic problem in this area is the lack of statutory definition in the state regulations. Due to the lack of this definition it is not possible do define clearly the purposes and directions of diversification. The indicated lack of statutory definition of diversification of agricultural holdings requires the search for the scope of this notion not only in a juridical approach but also in an economic one. On the whole, from the point of view of economic sciences diversification of farms means diversification in the structure of agricultural production as well as exploiting ground resources, capital and labour in farms for activities other than agricultural activity. It should also be added that the scale of production and incomes received from agricultural activity are determined by the condition of land resources in Polish farms, and above all, by fragmented land structure. Therefore there is no doubt that the Polish legislator should search for legal criteria for diversification which would also include the above mentioned economic parameters. The final purpose of such diversification should be the capacity to absorb the union support. In the Polish economic reality, necessity of supporting low output farms remains the main problem. This support should be based not only on the state funding but also union funding. This is a key issue for gradual change in land structure of farms. It seems essential to undertake complex activities aiming at the creation of full programme of changes in agriculture. ‘Rural’ policy of particular union states accepting legal instruments of diversification as a starting point should lead to lasting and balanced development of rural areas.