Farmers say they are dismayed by a deal on wages that will raise their costs by £50m per year.

The Agricultural Wages Board settlement will raise levels of pay across the sector by 4.5% - well ahead of settlements in other sectors and more than headline inflation.

The move would push growers on already slim margins out of business, said Bob Fiddaman, NFU employment spokesman. "Growers have got to make the money in order to pay it on. But there has been no increase in prices for produce in two years, which means we've had to swallow two wage rises."

It would accelerate the number of growers turning to arable cropping, where returns are high and labour costs much lower, he added, and make it harder for supermarkets to source British-grown fruit and veg.

When the new rates come into effect on 1 October, a low-skilled worker in horticulture and agriculture will get £6/hour. The top grade for craftsmen will hit £8.10/hour.

"We believe the final decision does not reflect the increases being granted in other areas of the economy or the economic situation of the sector," said Fiddaman. "Unfortunately we have been negotiating at a time of high inflation rates and we believe that played the decisive part in this outcome."

The decision had to be made by independent members of the Agricultural Wages Board after growers and union representatives failed to reach an agreement in negotiations last week.

The T&G gave the award a cautious welcome, but made it clear that bigger increases were expected next year.

T&G agriculture secretary Chris Kaufman said labour's contribution to agricultural costs had fallen five base points to 14% - a move he wanted to reverse with higher wages.

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