Capping payments to larger farmers - a move that would have discriminated heavily against the UK - appears to have been dropped from the latest version of the CAP "health check" circulating in Brussels.

EU agriculture commissioner Mariann Fischer Boel originally intended to make large, progressive cuts to farmers' single farm payments when she launched her health check last November.

At that time, she was proposing to take 10% off payments of over €100,000 (£76,000), 25% off payments over €200,000 (£152,000) and a massive 45% off payments over €300,000 (£228,000).

Article 69

This money was to be retained by each member state and used for so-called "Article 69" measures - Pillar 1 supports targeted at specific sectors.

It was estimated that this would affect over 6000 UK farmers and cost the farming industry about £56m.

But the latest draft text has dropped this capping approach. Instead, it suggests additional rates of modulation for larger farmers.

Compulsory modulation

As in the original health check document, the EU Commission is still suggesting that compulsory modulation, which currently takes 5% off single farm payments of over €5000 (£3800), be increased in steps to reach 13% by 2013.

It also demands that British farmers see an equivalent reduction in levels of voluntary, national modulation.

But, in a new development, the EU Commission is recommending that support payments in excess of €100,000 (£76,000) be cut by a further 3% modulation, those over €200,000 (£152,000) by a further 6% and those over €300,000 (£228,000) by a further 9%.

If accepted by farm ministers, this would see the largest farms having 22% of their SFPs docked by compulsory modulation - equivalent to €58,350 (£44,346) from a €350,000 (£266,000) subsidy cheque.

This is likely to be too much to swallow for many member states, though the fact that the deductions are being made by modulation rather than capping would mean the funds could be diverted to rural development.