The Rural Payments Agency will fail to hit its target of paying 95% of 2010 claims by the end of March.
Farm minister Jim Paice told Parliament that he regretted the failure and warned that the figure would be closer to 90%.
Mr Paice, who took control of the RPA Oversight Board to ensure targets were met and errors reduced, summoned farming industry representatives to discuss the news earlier this week.
“The representatives have been told of the situation and have asked us to give urgent consideration to making partial payments to those farmers who are not likely to be paid soon. I have undertaken to examine this option and will continue to keep the House of Commons informed,” Mr Paice said.
The minister blamed missing the target on a “legacy of system and data problems that needed to be corrected before accurate payments could be made”.
There remains a substantial backlog of cases which need to be reviewed for potential errors, Mr Paice said. Given the complexity of the existing systems and the inadequacy of the IT systems, speeding up payments is not simply a matter of increasing resources, he said.
“We are therefore looking at manually validating individual payments to those who would be unlikely to be paid on the system before 30 June. But we first need to ensure that such payments would meet the required standard of accuracy in order to avoid EU fines,” said Mr Paice.
The first target, to make payments to 85% of eligible claimants by the end of December 2010, was met, with 85.5% of the eligible population paid at that date.
“In the last six months some 140 “fixes” have been made to the IT system, which now allows us to be more confident in the accuracy, but does not significantly speed up the process.”