The NFU estimates that farmers have lost in excess of £1.6 billion during the period 1999-2001 as a result of losses in support payments, higher interest rate payments and transaction costs.

It is therefore no surprise that the union expressed its disappointment at today's announcement by Chancellor Gordon Brown that Britain will not yet hold a referendum on whether to join the single currency.

However, nion president Ben Gill said the commitment to setting out the process towards entry at a later time was a step in the right direction.

He said the NFU understands the importance of the Chancellor's five economic tests as a measure for the whole economy but stressed that the outcome is different when analysing the case for UK agriculture.

Gill said: 'There is no doubt that farmers and growers would be better off financially if Britain were in the euro zone so we are disappointed at the statement.

'The Chancellor draws attention to the economic risks of membership. But there are also significant risks and costs of non-membership and farmers are in a better position to understand this than anyone.' However, if the effect of non-membership on trade flows, foreign direct investment, price differences and so on is taken into account, the effect on the agricultural sector will be much higher. The overall effect could be in excess of £1 billion a year.

Farmers' incomes are heavily dependent on exchange rate movements, partly because agricultural commodities are sold across Europe and partly because farmers receive support payments from Europe.

Entering the euro zone would remove the exchange rate volatility farmers have known in recent years that have hindered investment and business decisions.

Mr Gill pointed out that the NFU's position on the single currency relates purely to the potential economic benefits of such a move for agriculture, not the political arguments.

He added: 'We are pleased that the Chancellor at least sets out the process for entry with a referendum, possibly next year. This will then give every citizen the opportunity to take a view, not only on the economic case but also on the wider cultural, social and political aspects.

'Farmers, like everyone else, have their own personal views on what is a very emotive subject.'

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