THE NFU expressed deep frustration at last week's budget which, it said, would hinder farmers' plans to grow green biofuel for the nation.

In spite of a call for a modest 2.8ppl reduction in fuel duty for biofuels, rates stayed the same at 20ppl.

The NFU said the agricultural industry was dealt another blow with a 2.4ppl increase on red diesel duty, a massive rise of 50pc coming into effect from September. This would equate to an increase of 10pc on the total price per litre, costing the food and farming industry millions of pounds a year.

Disappointment was also expressed that no preferential rate was given for a low-sulphur, red diesel fuel alternative.

NFU vice president Meurig Raymond said that, at a time of increasing public concern towards the environment and energy supply, the Chancellor's view on biofuels could only be seen as short-sighted.

"The budget leaves the fledging biofuel industry in limbo," he said, "Since the Government has not given any tax concessions, it is now urgent it finds another route to promote this vital industry."

Mr Raymond also expressed dismay at the increased tax on red diesel. "The Chancellor was making much of how the budget would help small businesses reinvest and look towards the future, but this will increase costs to an industry that is only just showing signs of recovery," he said.

Proposals to increase the inheritance tax threshold were greeted cautiously, as was the small hike in the VAT threshold to £58,000, rises only in line with inflation. Capital gains tax was frozen, with only a small rise in the annual exemption allowance.

Farmers who have incorporated their businesses could be hit by changes to the zero rate, with a 19pc corporation tax charge on the first £10,000 if profits are distributed - the zero rate will continue to apply to retained profits.

The NFU was pleased that the Government recognised the good progress made by farmers through the voluntary initiative as a positive alternative to a pesticide tax. The schemes in the initiative, aimed at the responsible use of pesticides, are delivering key environmental benefits which would not be delivered by a tax, which could cost the industry £125m a year.