If the UK remains within the EU then it will be offered “some sort of associate status”, the politician said.

Speaking at the Oxford Farming Conference, Mr Paterson said that the UK can leave the political arrangements of the European Union and still have access to the European market.

“They have a £70 billion surplus with us, 5 million Europeans depend on sales to the UK; they have an enormous strategic and selfish interest in being able to export to us,” Mr Paterson told the conference.

However, the European Agriculture Commissioner, Phil Hogan said that access to the internal market from outside the EU would come at a price.

“Would the British Exchequer be prepared to pay a price that fully guaranteed your access for agricultural products?” he asked.

“Would it expect farmers to pay part of the access-fee through higher taxes?”

Mr Paterson said that the first priority in growing the rural economy of the UK outside of the EU should be to increase food production.

He said a UK policy should encourage import substitution, the export of quality products and the Government should direct public procurement, which is worth £2.4 billion towards UK producers.

Agriculture and food production in the UK is hampered by the Common Agricultural Policy, because it means that the UK has to accept compromises, which Mr Paterson said have been “deeply unsatisfactory and at worst damaging to UK farmers”.

“Farmers are often exasperated by the difficulties of implementing the CAP,” Mr Paterson said.

“To add insult to injury, the European Commission then fines the UK for incorrectly implementing the CAP measures.”

He said that imposing a pan-European environment policy, with all the differences between the countries has proved impossible.

“Many aspects of greening are intrusive, costly and difficult to administer – some are wholly unsuited to the UK environment, such as the three crop rule.”

Mr Paterson added that outside the EU it would be possible for the UK exchequer to lend significant support to farmers.

At present they receive £2.9 billion from the CAP, but the UK pays in £9.8 billion and Mr Paterson said that much of this could be release back to the farming sector if the UK was outside the EU.

“By leaving he political structures of the EU, a UK government could not only pay as much if not more, than the CAP, but funds would be allocated in a much more effective and targeted manner,” he said.

He said regulation could be simplified and subsidies could be more specifically tailored to satisfy the UK’s unique geography and climate.

Mr Paterson told the conference that being outside of the EU, the UK would not be hampered and hindered by policies that are holding back advances in technology and science particularly in areas such as crop production products and genetic modification.

“Instead of the precautionary principle, I would like to see the UK adopt the innovation principle, which the Commission, to date, has shied away from,” he said.

Mr Paterson added that being outside of the EU, the UK would have a better voice on global bodies, rather than being part of a body representing 28 countries and he compared the situation with that of Australia and New Zealand.

“UK agriculture is heavily constrained by the EU,” he concluded.

“Subsidies are delivered through an immensely complex mechanism that should be radically simplified.

“Membership prevents us from working with like-minded countries to combat plant disease and animal disease.

“It prevents us from doing trade deals with countries that would buy our products.

“It restricts us from leadership in setting global regulation that would make sense for us and our allies.”

However, Commissioner Hogan warned that the UK could struggle on the world stage outside of the EU.

“How would Britain with a population of 60 million fare in negotiating with countries like China, with a population of 1.3 billion? In the EU it punches at a weight of 500 million, almost twice the size of the US,” he said.

He said that recent World Trade Organisation (WTO) negotiations in Kenya were brought to a climax on the phase out of export subsidies with discussion between the US, China, Brazil, India and the EU and major trading countries such as Canada, New Zealand, Japan and Australia were left outside the negotiating room.

He said that the CAP had brought stability and is providing the foundation for economic growth, emphasising that the CAP had changed dramatically from the concept of butter and beef mountains.

“Farmers have accepted and adapted to successive reforms and, in doing so, have had to grapple with the regulations,” Mr Hogan said.

He accepted that the greening measures had not been popular and has called for proposals for simplification.

He said that the next round of CAP simplification will reduce the number of regulations from 200 to 40 or 50.

The commissioner added: “Europe is, and has always been, a vital market for British produce.

“Today, the UK exports more to Ireland than is does to China, Japan, Canada, Russia, Saudi Arabia and South Korea combined.

“The EU accounts for 60 per cent of the UK’s food exports.”

He added: “The Union is engaging with what we might call the Anglosphere, which is a natural market for you in Britain.

“You can expect to benefit from this more than other member states.”