The Farmers Union of Wales has described the decision to cut support payments to hill farmers as a body blow.
A Welsh Assembly spokesman admitted that the 1.3m reduction in the agricultural budget would affect 2007 payments under the Tir Mynydd scheme, which replaced Hill Livestock Compensatory Allowances.
But the cut was part of the discussion with all opposition parties in order to reach wider agreement on a budget for the whole of Wales.
Gareth Vaughan, FUW president, claimed the cut would be a disaster for hill farmers already suffering a serious cash-flow crisis, and for the whole rural economy.
“The Tir Mynydd scheme recognises that certain areas, mainly hilly and mountainous areas, are particularly difficult to farm,” Mr Vaughan said.
“Production costs are higher and without support such as Tir Mynydd it is difficult to achieve a level of income comparable to that of farming in more favourable areas.”
The scheme provided socio-economic payments designed to keep farmers on the land rather than to support conservation objectives.
With almost 80% of the land in Wales designated as less favoured, any cut would have serious consequences.
One estimate indicates that the cut will reduce the average payment to Welsh farmers by 100.