Borrowing on UK farms has grown significantly and is relatively unchecked in recent times with a record £17.769bn in the year ending June.
The data shows a rise of £208m in overall agricultural borrowing which shows a continued trend year-on-year.
Historically borrowings normally fall around December time as farm subsidy payments make their way into the farmers' bank account.
Between 2009 and 2014, the drop is borrowing between November and December averaged 4.5%.
But increasing numbers of farmers are borrowing to ease cash flow problems with the Chair of the Environment, Food and Rural Affairs Committee Neil Parish MP saying farmers face 'extreme hardship' as prices for produce is low.
Increasingly volatile markets may mean farming businesses that are highly seasonal or have long profit cycles will need to think differently about managing their cash flow in the future.
NFU President Meurig Raymond said: "Cash flow problems are arguably the biggest threat for farm businesses at present. And the NFU has been working directly with the banks to ensure a positive dialogue continues in the face of external factors, outside of our control, which are having an impact on farmers’ bottom lines.
"Farmgate prices for key commodities are in a markedly different place than they were two years ago, leading to lower margins and profitability across the sector."
Half of UK farms 'no longer making a living'
Cash flow pressures were highlighted by research conducted by the Princes Countryside Fund in April.
The worst affected sectors are cereals, milk and pigs where incomes are dropping sharply, 17 per cent of farms face major financial problems as their liquidity ratio demonstrates they do not have the ability to pay off their short term debt.
Half of UK farms are no longer making a living from farming alone, and 20 per cent of farms generated a loss even before accounting for family labour and capital.
The businesses surveyed identified that on average more than half the proportion of their farming customers were currently experiencing cash flow issues.
The volatility of output prices does not just negatively affect farming businesses but the decreased cash flow filters through the wider agricultural sector.
This negatively impacts other businesses from input suppliers, vets, auction marts to consultants. Its effects include reduction in available work, decreasing income and potential staff redundancies although the full extent is not completely understood.
'Very bleak picture'
Lord Curry, Chairman of The Prince’s Countryside Fund said: "The research presents a very bleak picture not only for farmers; but also for the wider rural economy.
"Volatile commodity markets are not just affecting farmers; decreased cash flow is affecting the industry as a whole, from vets to feed and machinery suppliers to auction marts."
The full extent of the crisis is not yet fully understood.
"As a result we are witnessing a trend towards increased and sometimes risky borrowing by farmers.
"Distressingly the outlook does not look set to change in the short-term and the degree of uncertainty about the future is affecting everyone.
"This in turn is causing suppliers to consider making job redundancies and think about coming out of agriculture.
"It is essential that farm businesses seek professional advice, have all the support they need to cope and that they are equipped with risk and business management tools.
"Confidence, better cooperation and communication throughout the supply chain are needed if they are to survive."
