Falling farmgate prices and market price volatility are blamed for a drop in farmer confidence.

Farmers and growers told the NFU, as part of its fifth annual confidence survey, that they expected negative impacts on their businesses in the coming year relating to regulation and legislation (77 per cent); CAP reform (59 per cent); output prices (56 per cent) and input prices (52 per cent).

The survey also showed that the proportion of farmers predicting that ‘output prices’ would negatively affect them over the next 12 months has more than doubled in the last year (from 27 per cent in 2013 to 56 per cent in 2014).

NFU President Meurig Raymond said: “This year has seen farm-gate prices falling across various commodity sectors – arable, dairy, livestock and mixed – and this increased volatility has clearly impacted on our members’ confidence.

“At the time, we spoke to our members, wheat prices were down 30 per cent year-on-year. Similarly, global dairy prices were down 45 per cent all the while during a backdrop of sweeping cuts to the price of milk in this country.

“In beef, prices fell to three-year lows earlier this summer while potato prices are 24 per cent lower than they were this time last year. With the extent of those price shifts, it’s not surprising that less than one in 10 NFU members anticipate improvements in profitability.

“Given this highly volatile marketplace, it is no surprise to see that this has a knock on effect on confidence to invest on-farm, which is crucial in aiding our farmers and growers to produce more food in this country. It sends out clear signals that we as an industry must be given all the support we can to be more resilient during uncertain times.

“Our research does show that, on the whole, farmers remain relatively optimistic about their long-term prospects but no-one should underestimate the challenges that lie ahead in 2015.

"With an election less than six months away, the NFU and our members have a tremendous opportunity to outline these challenges to policymakers.”