FARMERS' incomes have recovered to their highest level since 1997, according to Defra.

Total income from farming - generated by production within the agriculture industry, including subsidies - rose by 34pc to £3.23bn this year, from £2.48bn in 2002.

This is the third year running that total income has increased, bringing it back to levels in the late Eighties and early Nineties, but still well below its 1995 peak.

Lord Whitty, Food and Farming Minister, welcomed the news, while recognising incomes were still well below those of the mid-Nineties.

"Farming has been through hard times," he said. "This welcome increase is driven largely by a more favourable exchange rate pushing up prices. It will also have been influenced by farmers' hard work, better business performance and ability to adapt to new conditions and ways of working."

The Government would continue to work with, and support, farmers to build a more sustainable, profitable and competitive industry.

The NFU welcomed the forecast improvement but said they were still 50pc down on the 1995 peak. In real terms, total farm income per head had risen from £11,700 in 2002 to £15,800 in 2003, reflecting the continuing reduction in the number of farmers.