Farmers need the support of Government and the supermarkets have to increase food prices to ensure the long-term future of the agricultural industry in the UK.

That was the warning from Brian Richardson, UK head of agriculture with Virgin Money, speaking at a ScotSheep preview briefing.

"We lend some £750m to Scottish farming businesses – a figure which has not changed that much over the past few years but when inflation challenges play out in the next 12-18months we expect to see full utilisation of overdrafts and increase in working capital," he said.

"Farmers do a fantastic job in producing cheap food for the consumer, but the economics have changed. Feed, fertiliser and fuel prices have increased and a fairer share needs to come back to the farmer. It is too early to say what will happen in the future as people are still consuming food the way they used to. It is how the end price is shared between the supermarket, processor and farmer, that needs to be addressed."

He urged producers to have a plan for the future and find out what can be done to safeguard their business.

"We are already seeing farmers tighten their budgets when it looks like being an expensive autumn with a potential squeeze on farm incomes," said Mr Richardson.

He did however add that farmers are extremely resilient and have effectively enjoyed two years of improved ex-farm prices, with the exception of the pig industry.

Mr Richardson was speaking ahead of the ScotSheep event at Upper Finlarg, on June 1, where Virgin Money, is the mainline sponsor. He also announced that the bank has collaboratively initiated a total carbon audit on the farm, with Carbon Metrics, the results of which will be announced on the day.

The bank's most recent survey, completed by 300 of their agri-customers, revealed that over 46% of Scottish businesses had completed a carbon audit to help them plan for the future in the last six months, and 25% of Scottish farmers had been asked by their own customers to provide evidence of their actions to reduce carbon emissions.