The weakening of the postwar nexus of a productivist agriculture and a distinctive system of regulating the rural economy has created new challenges for British rural institutions. The task of diversifying rural and farm economies has required the institutions to change how they operate. Using the concept of the local mode of social regulation (MSR) we explore the interrelationships between the development of alternative farming systems and the institutional regulatory environment, using as a case study an area in northern England. We conclude by demonstrating how institutions cope with new policy challenges. The diversity of local responses to this challenge is illustrated and the links between local and national MSR are explored.