The UK government has been told to scrap its controversial changes to inheritance tax following the release of figures which show a huge drop in farm incomes in Wales.
Falling incomes mean that Welsh farmers are struggling to find the confidence to make decisions to drive their businesses forward, NFU Cymru has said.
The warning follows the release of the Welsh government's latest farm income figures which have put a spotlight on the challenges facing farmers at present.
The figures, which cover the period April 2023 to March 2024, show that incomes across all farm types fell on average by 34%.
Dairy farmers saw their income drop by a massive 59% as a result of a fall in milk prices, while input costs were elevated.
Cattle and sheep farms in less favoured areas saw incomes decline by 9% to £22,200, while lowland cattle and sheep farms were the only category to see an increase in income, up 23% to £23,000.
Profitability on livestock farms was impacted by a reduction in farm output and input costs remaining high compared to historic figures.
NFU Cymru said the falling incomes had been compounded by the UK government budget announcing changes to agricultural property relief (APR).
Under the proposal, farmers will, from April 2026, pay a 20% rate of inheritance tax on assets they inherit worth more than £1m.
NFU Cymru warned that this had left many farmers questioning their ability to remain in the industry and to pass the farm on the next generation.
"These figures show that the money is not there to foot an inheritance tax bill that could run into hundreds of thousands of pounds for some farmers," said president Aled Jones.
"The UK government must halt this tax which will have a huge detrimental impact on the Welsh family farm."
Farmers in Wales are also seeing costs associated with complying with water quality regulations and continued market volatility coupled with rising costs.
Other pressing issues include continuing bovine TB pressures and uncertainty around Wales' post-Brexit Sustainable Farming Scheme (SFS).
NFU Cymru said all these issues were weighing heavily on farming families across Wales, and that the new income figures would do little to restore that confidence.
Mr Jones concluded: "The farm income figures show that farmers simply cannot afford, the costs based on the profitability of Welsh farming at the moment, even with grant support."
The union recently undertook a survey of farmers to gain an understanding of the impact of the water quality regulations on the industry.
The survey showed that a majority of farmers had or needed to invest to meet the requirements of the new regulations, with an estimated mean cost of investments at approximately £100,000, with 12% stating the cost was over £200,000.
