FARM incomes have plummeted by a disastrous 90pc over the last five years, with Northern farmers in the red.

Deloitte and Touche say the results are the worst since they began their authoratative annual survey 11 years ago, and they warn of worse to come as all main sectors of UK agriculture, with the exception of root crops, are forecast to record losses in the coming year.

The national average net farm income is now just £41 a hectare (£16 an acre) compared with £57 for 1998/99. It is forecast to fall to a loss of £22 a hectare next year.

"Nationally our clients are now earning just 10pc of what they were earning at their peak in 1995-96," said Mr James Craddock of the Leeds office of Deloitte and Touche Agriculture. "For an average 500-acre farm this equates to a mere £8,000 which is not sufficient to support one family, let alone two, which is often the case for family farms."

The firm's Northern clients had fared even worse, returning a net loss of £27 a hectare compared to a profit of £32 last year. "The main reason is that a higher proportion of potatoes grown on our Yorkshire farms were hit by plummeting free market potato prices," said Mr Craddock.

More encouraging results were achieved by cereal growers in the North where wheat yields and prices matched the national average.

The survey also shows farmers are hugely dependent on subsidies, with the cost of producing a tonne of wheat now exceeding the market price.

"European farming subsidies are not only the lifeline of the UK farmer but are now also vital to the viability of the rural economy," said Mr Craddock.

"Our clients have reacted to falling incomes and have been very resourceful in reducing overheads over the last two years. Unfortunately, this will not be enough, with our prediction for next year showing a loss of £4,450 for our average national 500-acre farm.

"The way forward is to know your costs, then find ways to share resources and reduce them."

While many family farming businesses would continue to struggle along on the poverty line, he said the big loser would be the countryside.

"When farming is in profit, money is invariably re-invested in enhancing the countryside and environment," said Mr Craddock. "When fortunes take a downturn on the scale we are seeing, any investment in the landscape dries up and everyone in Britain will be the poorer for that."

l The publication of the report coincided with the NFU stepping up its campaign for the government to pay agrimoney aid to cereal farmers to compensate for the strong pound.

The NFU has expressed grave fears that the 22,000 job losses from farming in the 12 months to June last year will be exceeded in the current year's census figures, to be published in December.

Mr Ben Gill, NFU president, said the Deloitte and Touche survey illustrated the crisis affecting British agriculture and its impact on every farm in the country, large or small.

"The public has witnessed the devastation of trade and business in this country's pig sector and the pressures facing our dairy farmers," he said. "These figures demonstrate that our arable farmers are also on the rocks.

"The government has a duty to pay agrimoney compensation to these farmers."

On Thursday of last week Mr John Goodfellow, Northumberland county NFU chairman, explained the problems to Mr Gordon Adam, Euro MP, who visited his farm near Morpeth. It was the first of a series of such visits organised by the NFU throughout the country to give first-hand information on cereal farmers' problems.

The wet weather meant the harvest in Northumberland was finished only the previous week and, with rising production costs, dismal grain prices, and the strong pound, this year's harvest is the worst for at least 30 years.

The NFU says Europe has put aside £91m to help British farmers but the Treasury has only until October 31 to apply for it