The CRC, which promotes awareness of the social and economic needs of people in rural areas, identified the root causes of farming poverty and set out what it believes the Government needs to do to address the situation.
It said upland livestock farms were the most likely to be affected, as well as those on tenant farms. For the majority, the ability to earn income off-farm is now essential to subsidise traditional livelihoods, the CRC added.
Overall, nearly two out of three farms had some form of off-farm income in 2008-09 and the total income from diversified activities was £300m.
For solutions, the report looks to planning regulations, pension planning, affordable rural housing, access to welfare benefits, addressing low skills and pay and farm business development.
NFU head of economics and international affairs Tom Hind said: "While many farmers are managing to drive their businesses forward, a good many others are struggling to make ends meet. Were it not for support farmers receive from the Common Agricultural Policy (CAP), many more would fall below the poverty line.
"These issues may be most apparent among grazing livestock and tenant farmers, but businesses in all sectors face income challenges.
"We would support many of the recommendations made by the CRC in its report. However, it has failed to recognise that farmers are proud individuals who do not want to live from handouts.
"Instead, farmers want to earn their living from the food they grow and the livestock they raise. For this we need to see markets that function properly and a fair and transparent supply chain.
"The challenge for the UK Government and EU institutions that are now debating the reform of the CAP is to help farmers become less dependent on public support by addressing the fundamental failures that exist in markets."
- To view the report, see www.ruralcommunities.gov.uk