The European Commission will reveal its strategy to change the way LFA status is awarded in a ‘communication' document later on today (Tuesday, April 21).

However, leaked copies of the communication, ‘Towards a better targeting of the aid to farmers in areas with natural handicaps', already suggest British hill farmers could face a dramatic reduction in payments.

UK farming unions fear changes to the scheme could force many farmers to de-stock or quit the industry altogether.

Farmers are currently awarded LFA status based on 100 criteria that assess natural handicaps to farming, such as steep slopes and high altitudes, and socio-economic handicaps, such as remoteness from a market.

Under the leaked plans, however, socio-economic criteria could be removed and LFA status will instead be determined by eight 'biophysical' indicators, to be used throughout the EU.

These will include climate indicators such as low temperature and heat stress and soil indicators, such as stoniness.

NFU Cymru president Dai Davies said recently many of Britain's upland and hill farmers would lose out if socio-economic criteria were removed from the LFA scheme.

“Peripherality, remoteness from markets and low service provision are real and major issues in the hills and uplands and have the potential to lead to contraction in farming and land abandonment unless their effects can be mitigated,” he told a House of Lords committee.

Industry leaders argued the new criteria were more applicable to Mediterranean climates and did not take into consideration the unique situation faced by UK producers.

The Commission has been forced to make changes to the way LFA status is awarded after a 2003 Court of Auditors report criticised the scheme for the ‘extreme diversity' in criteria used by individual member states for designating LFAs.