Scottish farmers and crofters will see major cuts to their payments under the Less Favoured Area Support Scheme (LFASS).
Compulsory changes to regulations governing LFASS made by the European Commission mean that LFASS support in 2019 will, as expected, be at 80 per cent of the former level.
The 2020 payment will now however be at 40 per cent rather the 20 per cent originally proposed.
Scotland is the only part of the UK to continue such a payment.
Rural Economy Secretary Fergus Ewing said: “LFASS is crucial for our hill farmers and crofters. That is why I am pleased to confirm they will continue to receive payments at 80 per cent and 40 per cent into 2020.
“I fully accept that this is not ideal, but under changes to EU regulations there is no option but to revise payment rates down. Importantly, we are clear this change will not impact on those who receive the minimum payment of £385, which is not being reduced.
“I will continue to strongly push for further revisions and have submitted proposed amendments to give more flexibility in setting the rates for 2020 – a move I fully expect the UK Government to support.”
Jonnie Hall, NFU Scotland’s director of policy added: “We believe there are both practical and legal ways forward to resolve the LFASS shortfalls for 2019 and 2020.
"The issue now is whether Scottish Government is willing to run with such approaches and to fully restore the £65 million LFASS budget which is more critical than ever.
“Given a primary objective of LFASS or Areas of Natural Constraint support is the prevention of land abandonment, it is undeniable that continuity of LFASS payments at current levels is needed in order to ensure continued agricultural activity in remote and more disadvantaged areas.
“Critical LFASS payments are a significant injection of cash flow in to rural economies.”