Plummeting farm incomes across several key sectors have illustrated the "stark" financial situation facing food producers, warned industry leaders.

Farmers across the country have grappled with high input costs and lower commodity prices in the past year, compounded by the continued phase-out of EU-era direct subsidy payments and one of the wettest winters in decades.

Defra's latest estimates show average farm business income fell in 2023/24 for all farm types except specialist pig and poultry units.

For cereal growers, incomes fell by 73pc to £39,400, "following two years of exceptional highs", while general cropping farms' average income was 24pc lower than the previous year, at £95,300.

A "combination of lower output prices and yields" was a key factor for both farm types, says Defra.

Dairy farms' average income fell 68pc to £70,900, mainly driven by a fall in the farmgate price of milk, and on lowland grazing livestock farms incomes fell by nearly a quarter to £17,300, driven by "lower output from crop and sheep enterprises".

By contrast, average farm business income increased to £135,800 for specialist pig farms, reflecting "higher prices and throughput", and on specialist poultry farms the average rose by nearly a quarter to £143,600, with "higher output from egg enterprises the main driver".

National Farmers' Union (NFU president Tom BradshawNational Farmers' Union (NFU president Tom Bradshaw (Image: John Cottle) National Farmers' Union (NFU president Tom Bradshaw said the falling incomes illustrated the urgent need for a government re-think on controversial changes to inheritance tax relief, announced in the budget, which threatens the future of many family farms.

“Defra’s estimated farm business income figures for 2023/24, paint a stark picture of the challenges facing many farmers, with rising input costs, significantly lower commodity prices, a reduction in direct payments and one of the wettest winters in decades leaving many businesses worse off," he said.

“Profitable farm businesses are essential if we are to deliver what the country needs; food security, with food produced to world leading standards and environmental protection.

“The recent budget announcing changes to Agriculture Property Relief (APR) and Business Property Relief (BPR) have left farmers reeling.

"Many will be faced with a tax bill of millions. Some will be forced to sell all or part of their farm to raise the funds.

“There has been a clear Treasury miscalculation of the impact this will have on farmers and growers.

“The only sensible course of action is for the Treasury to reverse this decision, and soon.”