THE blueprint for the future of the beleaguered farming industry unveiled on Tuesday has been called a "watershed" by Secretary of State for DEFRA Margaret Beckett.

It calls for some subsidies to be redirected from producing crops to environmental schemes to protect and enhance the countryside.

Farmers would have to demonstrate their activities were "environmentally friendly" to qualify for the new regime of subsidies. In addition, supermarkets will be encouraged to sell more locally-produced food to give a boost to cash-strapped farmers.

The report was written by members of the Policy Commission on the Future of Farming and Food. It had been set up by Prime Minister Tony Blair in the wake of the foot-and-mouth crisis.

"Agriculture needs to change," said the Prime Minister. "As the commission notes, the current situation benefits no one: farmers, taxpayers, consumers, or the environment.

"The commission's vision for a future of sustainable food and farming industries is one that many will find attractive. But, as ever, the challenge is in getting there. We want to work with farmers and all other stakeholders to build a consensus for change."

Margaret Beckett said: "This report points the way towards greater co-operation across the food chain, greater attention to the needs of consumers and a proper appreciation of the importance farming has for our rural environment."

The 'modulation' aspects of the farming policy are strongly opposed by the National Farmers' Union.

Farmers will be angry at one of the core proposals taking away 10pc of farmers' support payments from 2004 to fund rural development and environmental measures, said NFU president Ben Gill.

"With the industry in its current dire state, it is hardly surprising that we oppose suggestions of taking money from farmers in this way. It equates to taking away cash that farmers simply do not have," he said.

Updated: 09:14 Thursday, January 31, 2002