For the first time in more than 10 years, the Bank of England has raised interest rates, from 0.25 to 0.5 per cent.
It is the first increase since July 2007, and will push up the cost of borrowing on farming businesses.
NFU economist Anand Dossa said: “Farming is an industry with increasing borrowing levels, currently at a record high of £18.6 billion and so this increase in interest rates will have an impact on the sector.
“The rate rise also comes at a time when farm businesses have already witnessed rising input costs totalling 7% over the past year. This demonstrates the volatility farmers are all too familiar with.
“Given the pound is likely to strengthen as a result of the rate rise, this will have an additional impact on farming businesses with farmers facing increased costs at a time when the trade environment is already uncertain.”
Mr Dossa said the NFU have been urging Government to look at its policies to ensure the industry has a productive home-grown food and farming sector.
He continued: “It is vital the new domestic agricultural policy needed post-Brexit includes measures to manage volatility to ensure more business certainty for farmers and support a competitive, profitable and progressive farming sector.”
Mr Dossa called on lenders to understand the agricultural industry's needs for stability in the face of further volatility.
