There are fears that rising costs may threaten UK food supply as a new survey warns that a quarter of farmers may consider cutting production if prices do not reflect costs more fairly.
The latest annual survey carried out by Virgin Money puts a spotlight on the growing concern in the industry over input costs, which may cut food production as a result.
The profound effects of a turbulent few years of major change for the UK agricultural industry are reflected in the responses to the bank's third annual survey.
The vast majority (82%) of farmers believe that higher input costs have not been matched by farm gate prices and over 70% of farmers may consider cutting production.
Only 6% of farmer respondents have felt any positive impact from Brexit, with those reporting a negative impact remaining the same as last year at 50%.
The survey was carried out with an online questionnaire sent to all Virgin Money agricultural customers in April and June this year.
Over 300 responded to current issues including the impact of Brexit, new UK farming policy, input cost inflation, and how these factors might affect their future plans.
Brexit remains a major issue for UK farmers, with just 6% feeling that leaving the EU has had a positive impact and 50% reporting it was negative for their business.
There were significant regional differences in the reported impact of Brexit, with 58% anticipating new agricultural policy to affect them negatively in Scotland whilst that figure rose to 86% in England.
Looking forward, 37% felt that UK agriculture would be worse off as a result of Brexit over the long term, and just 16% believed prospects for farming would be better.
The survey also shows that a massive 82% of farmers believe that higher input costs had not been reflected in higher farm gate prices.
A quarter of respondents said they were very likely to cut production if prices do not represent those higher input costs more fairly, and 47% said they will consider it.
When it came to the future, more than 1 in 5 (22%) farming customers have considered leaving the industry, principally due to age, proximity to retirement and lack of succession as the main reasons.
The 78% who said no to leaving the industry were committed to the sector citing job satisfaction, family heritage and the next generation as reasons for their continuation.
Brian Richardson, head of agriculture at Virgin Money, said there was a challenge for farmers of not being able to pass on higher input costs, and the potential squeeze that would have on farm incomes in the coming year.
He said: “From the number and detail of the responses we can see the importance of having clarity on new support policy and how that will be funded going forward.
"Farming is a very long term industry and it is critically important farmers can make long term plans to future-proof their businesses.
"The coming years will clearly be challenging and once again I would urge every farmer to look hard at their business."
