Animals that are compulsorily slaughtered in the event of a disease outbreak will continue to receive full compensation, following a change of heart by the EU Commission in Brussels.

EU officials had sought to cut the rate of compensation from 100% to 75% as part of a review of the rules surrounding national state aids. They had also planned to prevent any payments unless a farmer had lost at least 30% of his production, and restrict compensation to small- and medium-sized businesses.

But a concerted lobbying campaign by the main UK farming unions and DEFRA in Brussels has forced a rethink. A new proposal was presented to a member- state working group this week with all the restrictions removed.

"We have been working on this for about five months," said assistant director of the NFU's office in Brussels David Hemingway.

"No one else seemed to have picked up on it. Other member states were more interested in things like funding for promotion rather than disease compensation. We had to fire up other farm organisations and MEPs to fight this one."

Considerable benefits

The financial benefits to farmers were considerable, he added. "A back-of-the-envelope calculation suggests the loss to UK farmers would have been about £300m had the proposed restrictions been in place before the foot-and-mouth outbreak in 2001."

The new state aid rules are due to take effect from 1 January 2007 and are being implemented under the commission's own authority, without the involvement of the European parliament or the council of ministers.

"Getting the commission to revise its proposal was, therefore, essential," said Mr Hemingway.

NFU Scotland president John Kinnaird agreed the original proposals would have been hugely damaging. "Anyone who faced the horror of the foot-and-mouth outbreak in 2001 knows the impact that disease outbreaks have.

Reducing aid to farmers in times like these would have been potentially disastrous."