This paper offers an empirical test of a middle-order theorisation of business change on family labour farms. The concept of 'paths of farm business development' is examined in the northern Pennines of England using discriminant analysis and 34 variables drawn from the published literature on the dynamics of the family farm. Farm indebtedness is shown to be the dominant variable discriminating between farms in the different pathways, although the exact role of farm debt varies between pathways. Farm families selecting the alternative farm enterprise (AFE) pathway can be divided between those that display 'accumulation' (principal AFE) and 'survival' (marginal AFE) behaviours. The findings are contextualised to the U.K. and an era of historically high interest rates and farm indebtedness. Copyright (~) 1996 Elsevier Science Ltd