The annual NFU farmer confidence survey reveals that despite confidence being up on 2012 overall, 74 per cent thought regulation and legislation would most likely have a negative impact on their businesses, with input prices and CAP at 68 per cent and 50 per cent respectively.

NFU chief economist Phil Bicknell said: “Farmers are feeling more positive about the future after the horrendous conditions of 2012. However, looking down the track, farmers can see that there are clear issues that will harm their productivity and impact on their business.

“74 per cent of those questioned put regulation at the top of the list. To me, that is a clear message that government must to do all that it can to ease regulatory pressure. A lot of frustration remains in this area with farmers reporting little perceptible difference of burden on the ground, despite initiatives like Red Tape Challenge and the Farming Regulation Task Force. For these initiatives to be credible, we need to start seeing positive outcomes and farmers benefiting from the changes. While in Europe, policies like the neonicotinoid restrictions have been pushed through without agreement from all member states, and could have significant impact on arable farmers in the coming years.

“Input costs have consistently featured second on the list over recent years as Defra figures show that farming’s total cost base has gone up by 21 per cent since 2010. Fertilizers and feed are up by 22 per cent and 44 per cent respectively, with added volatility also creating challenges.

“And this year, CAP reform is added to the top three factors likely to have a negative impact for agricultural businesses. With CAP moving higher up the issues rankings, this is a strong signal of farmers’ pessimism over the new CAP. Budget cuts, the uncertainty surrounding new agri-environment schemes and the commercial impact of the new mandatory 'greening' rules have already negatively influenced farmers’ perception of the new legal framework more than a year ahead of its implementation.

“Confidence is critical because it influences investment and production intentions. Overall, it seems that the improved weather conditions had a positive impact on short-term confidence. This is clearly good news, but we need to be looking to the long term if we’re going to meet the food production challenges that lie ahead. If we want our farms to compete in an increasingly global market place and make the most of emerging export opportunities, we need government action that addresses uncertainty, incentivises consistent investment patterns and produces action rather than rhetoric when it comes to reducing red tape.”