Scottish farming leaders have warned the CAP reform process is going to “result in hell” for the country’s producers.

Speaking at the Royal Highland Show, NFU Scotland president Nigel Miller attempted to prepare the farming industry for what he said was “much pain ahead” as the options and flexibility open to negotiators were closed down by the European Commission.

And he described the basic area payment, which is likely to be the foundation instrument of the new single farm payment, as a “blunt instrument”.

“For most Scottish farmers this is going to be terrible,” he said. “Producers urgently need to change their mindset about what is achievable because as much as €100m may need to be given to businesses that will qualify for a single farm premium in the future but that don’t have any entitlements just now.”

Mr Miller said that specific change alone would account for a 15-20% deduction in the value of everyone’s existing SFP entitlements, and predicted the most any Scottish farmer would achieve in future was €250-280/ha instead of the €500/ha many now achieved.

“The only winners in a new regime will be new entrants and other anomalies but even then the timescale is slipping,” he added. “It might be 2015-16 before we get agreement so we will look for a National Reserve in 2013 to sort out some of the people who have been disadvantaged.”

The president appealed to government ministers to negotiate hard and said the next major step on the road to reform of the CAP was the publication next week of the Commission’s proposed financial perspective for the budget over the period 2013-2020.

He said: “We await the proposal with interest and assuming the budget gets a fair wind from member states, then we will then be on course for the Commission’s legislative proposals for CAP reform to be made public in October or November.

Meanwhile, NFUS is consulting its membership on an internal discussion document that sets out a regional approach to distributing CAP funds equitably in Scotland.