Farmers' leaders have denounced agricultural pay rises as "out of step with reality" and warned that suppliers would struggle to absorb the increased costs.

The Agricultural Wages Board met last week to set pay rates for agricultural and dairy workers, with new minimum hourly rates ranging from £5.74 for grade 1 to £8.45 for grade 6. These represent increases of 4.1% for grade 1 and 4.3% for grades 2-6 and come into effect on October 1.

The NFU described the terms as "out of step with the economic environment in which the sector operates" and called into question the judgement of the AWB. "The overall cost increase is difficult to quantify at this stage but is estimated at £60m," said NFU spokesman Bob Fiddaman.

The Unite union had called for an increase of 6% across all payment grades prior to the meeting. It said the farms needed to offer more attractive wages as the sector faced a labour shortage aggravated by migrant workers going home and an ageing domestic workforce.