Small and medium-sized farms all over Europe guarantee their survival by a broad range of strategies and different income sources. In remoter areas of highly developed countries such as the UK, such strategies may be expected to have their own characteristics, both legislative and socio-economic. This paper reports results from a socio-economic survey carried out among 40 Scottish agricultural households in the Caithness and Sutherland region of the North of Scotland, focussing specifically on the diversification strategies of (larger) farms and (smaller) crofts related to the multifunctionality of agriculture. After analysing the land, labour and capital use of farm/croft households in the region, the paper analyses why farms/crofts in this remote area have chosen specific diversification or specialisation strategies, and briefly considers their futures. The survey showed that only a quarter of the average household income of crofts comes from agriculture, and that this proportion (like the equivalent on farms) derives from substantial CAP subsidies. However, these known (if declining) income source may be the basis for the development of small and medium-sized rural enterprises if crofters and farmers are sufficiently educated, skilled and dedicated. The paper shows that, in times of economic decline, crofting (which has been the subject of a recent report to the Scottish Government) and farming in this area can be the basis of farm household survival in remote rural areas of developed countries.