Farming leaders are playing down the fact latest Defra figures are showing a downturn in farming income.

The National Farmers’ Union said it had predicted that the modest recovery in farm incomes over the last few years would falter, according to the latest Total Income From Farming figures.

It was quick to assure the sector that CAP reform would be an opportunity for the industry to regroup.

The figures published by Defra, show, while market output has increased, production costs, including energy, fertiliser and feed, far outweigh this increase. So the farmers in the UK whose core business is producing food have seen a downturn in income.

Dr Derrick Wilkinson, chief economist for the NFU, said: "We were seeing a slight recovery from the low point of 2000, but the figures show this is now beginning to tail off.

"One of the major reasons for this downturn has been the increase in costs and this highlights the need for farmgate prices to rise.

"With the onset of CAP reform, farmers are beginning to reassess their business, improve efficiency and look for new markets. Single farm payment will see support separated from food production and this will enable the industry to achieve a more long-term, profitable position.

“Many farmers will see their single farm payment as a financial cushion while they implement their new business plans.

"Figures on diversification published in conjunction with TIFF today showed some farmers benefiting from diversifying their business.

“For many this process has provided a lifeline during a low point in the industry but as far as the bulk of professional farmers are concerned, it is unlikely to provide an alternative to their core business which is producing quality, good value food."