The South West and West Midlands could lose most of their beef and dairy farms if the threat of bovine TB continues, farmers' union the NFU has warned.
The government is considering whether to allow a cull of badgers
NFU regional director Anthony Gibson spoke as a row erupted over new compensation payments for farmers with cattle affected by TB.
The South West is one of the worst-affected areas for bovine TB.
The Department for Environment, Farming and Rural Affairs (Defra) said the payments were fair.
In the South West, 2,807 (12%) of cattle farms were under restrictions in February this year because of positive TB tests.
In Devon the figure was 981 (17%) and in Cornwall, it was 511 farms (14%).
Defra has introduced new compensation payments for farmers following research by Reading University which suggested that farmers suffered a net loss from losing infected cattle.
But the NFU warned that if the new compensation values for affected cattle were not increased, farmers would give up their herds.
Mr Gibson told BBC Farming Today: "What was a fair compensation scheme is an unfair scheme in some cases."
And he warned the "engine room" of beef and milk production in the UK was under threat.
He said: "If the situation continues to worsen, TB could be a major factor in determining whether, particularly in the South West, but also the West Midlands, those areas remain as major mainstream players in beef and dairy production."
Farmers have been calling for a badger cull to reduce the spread of bovine TB, but conservationists oppose the move.
The government, which paid farmers £35m compensation in 2004, is considering its next step after consultation ended last month.
Defra said in a statement: "No farmer will be under-compensated, because the amount is determined on the basis that the affected cattle are healthy.
"Table valuations are based on average sale process so compensation will fall somewhere between the minimum and maximum price achieved within each category."
Worcestershire farmer Ruth Goodman, who is selling her dairy herd, blames low milk prices and poor TB compensation.
She said: "The dairy industry and the herds in this country cannot afford for TB to spread and remain endemic.
"It has got to be addressed."