THE vast difference between farm gate and retail prices has again been highlighted by Ben Gill, president of the NFU.

Speaking in York, he said farmers generally received only a third of what was charged in the shops.

"But in the rest of Europe they have lower retail prices, even though VAT is charged on food in most countries, so food is cheaper yet the farm gate price is higher," he said.

The longer food chain in this country was undoubtedly partly responsible, but the huge difference needed thorough investigation.

Mr Gill was addressing the fourth annual Yorkshire Farmers' Conference held at York racecourse on Thursday night of last week.

He said the farm income figures in Europe, including Britain, had risen by an average of 7pc since 1995.

But the UK figure was actually minus 42pc, while France was up 6pc, Germany up 34pc and even Italy up 14pc.

"That is the difference we need to be looking at and trying to find out what has gone wrong," said Mr Gill.

The latest Total Income from Farming (TIFF) figures had just been released and stood at £2.25bn - just over £10,000 per head.

But Mr Gill stressed that £10,000 was not spare money, it was all the farmer had left to pay his labour and for re-investment. The figure needed to be between £3.5bn and £4bn to make farming sustainable.

He highlighted issues facing farmers and said co-operation was one of the key ways of achieving future profitability.

In Europe the food chain was very short which meant less cost. British farmers should follow suit. A long chain also created confusion.

In Europe farmers worked closely together, something British farmers had consistently refused to do. A recent survey saw UK farmers put their independence as the second most important thing.

But Mr Gill said co-operating with other farmers did not mean they had to give up that independence. It would simply give them the potential to get better prices.

An English Food and Farming Partnership will be launched next year to set best practice.

Mr Gill outlined other issues facing farmers. They included:

*Currency and the relative strength of sterling, not only against the Euro but against other world markets

*Regulation, a major cost burden for UK farmers. He called on the Government to drop "populistic politics" and ensure new legislation was proportionate and based on risk

*There was a need for long-term research into such things as crop breeding and climate change

*There was great potential for an increase in non-food crops, such as bio-fuels, starches, lubricants, fibres and specialist oils

*CAP reform and World Trade Organisation initiatives had to be monitored carefully to ensure they were focused on the market place.

The conference was organised by Carter Jonas, PricewaterhouseCoopers and AMC.

Andrew Fallows of Carter Jonas, spoke about the changes in land ownership and the ways in which farmers could address falling incomes.

Many owners of land were looking for non-farming income from such things as telecommunication masts, wind turbines, tourism businesses, minerals and even potential landfill opportunities.

David Turner, head of agri-business at PricewaterhouseCoopers, highlighted some of the common pitfalls facing farmers in relation to capital gains tax, inheritance tax and income tax.

One of his main warnings was to watch out for the danger of going so far down the diversification road that agricultural tax relief was lost, possibly through the scale of the operation compared to the remaining agricultural side of the business.

The Inland Revenue was currently looking at farmhouses and whether the size matched the amount of land being farmed.

There were also dangers when parents retired, passed the farm to the younger generation but remained living in the farmhouse.

On their death, the family would be liable to inheritance tax. "To get agricultural property relief you must keep the business and the farmhouse within the same business," said Mr Turner.

More than 100 farmers attended the conference, which was chaired by Adrian Cawood of AMC. He said: "This conference has earned its place in Yorkshire's agricultural calendar and we were delighted to have a keynote speaker of the calibre of Ben Gill.