The current debate over the UK's membership of the EU and the Prime Ministers' recent announcement of a referendum 'should be a huge concern to farmers' said Emyr Jones of the Farmers' Union of Wales at a House of Lords event.
"That production provides a backbone to our rural communities, socially, economically and environmentally, and employment for large numbers of people in rural and urban communities" he said.
David Cameron has promised a referendum before the end of 2017 if his party wins the next election.
"Put bluntly, our communities - our backbone and culture - depend upon our ability to produce such excellent food."
"As farmers we are passionate about food production, about the quality of our livestock, the quality of our cheeses and other produce and this is reflected in the awards and international recognition we receive for our livestock and our produce."
"But, passionate as we may be about food production, passion alone cannot sustain us and for production to continue our businesses must also be financially sustainable.
The union said income was dependent on payments received through the EU and pledges by the Prime Ministers to hold a referendum in the future 'would therefore be a huge concern to farmers in the UK'.
"The UK government - like the previous government - has made it clear that it will not provide that half a billion if we exit the EU. But they do not explain how our economy in Wales will make up for the loss of that half a billion.
"To make up for that money a Welsh hill farmer would have to charge an extra £40 for his lambs or make a saving of £40 a lamb - there is no way that doing away with EU rules will save £40 per lamb - but it might save £8 a lamb if both the UK and EU stop making and gold plating crazy rules such as electronic sheep ID."
Referring to the threatened closure of the Welsh Country Foods lamb processing plant on Anglesey, Jones added: "We have recently seen the impact that the loss of a single supermarket outlet can mean to an entire community - the potential loss of 350 jobs and a massive knock on for the farming community and for Hybu Cig Cymru."
"It would mean the loss of the primary producers which supply our factories, the loss of multiple markets, the loss of our food security, and liberalised imports of food produced to lower environmental and animal health and welfare standards.
"While such matters may seem a million miles away as we enjoy the splendid Welsh food prepared for us today, let’s hope that all the forces which have come together to allow this to happen, and the economic, social and environmental benefits which rely on food production, are not lost amongst the rhetoric which has too often dominated the in-out debate."
