Environment Correspondent Margaret Gilmore: "The farming industry is being made to change"

The measures, expected to be made public in November, are intended to reverse the plummeting incomes experienced by UK farms over the last three years.

Even heavily diversified farms - usually considered the most resistant to crisis - have suffered badly.

Average earnings have fallen 80% since 1996, raising the prospect of thousands of farms going bankrupt with the loss of many thousands more jobs.

Farm produce prices have slumped globally

In 1996, the average farm's income before tax was �100,000-a-year, compared to �12,000 in 1998.

The principle causes of the slump are the strong pound, which makes British exports expensive; the BSE crisis, which has destroyed the beef market; and a worldwide collapse in prices for farm produce generally.

But even farms well insulated against crisis by careful diversification are being driven to the point of bankruptcy.

The BSE crisis is still costing farmers money

North Yorkshire farmers Mark and Kathleen Phalp, who farm sheep, cattle and wheat, are contending with the collapse of all of their major sources of income.

Lamb prices are down 34%, beef down 20% and wheat down 33%.

Mrs Phalp is looking for another job to supplement her income from farming.

"We hope there's a future there for us, but when it comes to our girls, it may not be the farm as we know it," she said.

Live exports of lamb have fallen due to animal rights protests, but also because of a collapse in demand for sheepskins due to the financial crisis in Russia.

Record wheat harvests have caused a glut

National Farmers Union spokesman Ian Gardiner said: "I doubt if many farmers knew their skins went there.

"All of a sudden, every sheep in Britain was devalued by at least �5."

The UK beef export market was effectively killed off by the protracted BSE crisis and even now may be costing farmers at least �70 per head of cattle because butchers are not allowed to buy bone and offal.

Spokesman for accountants Deloitte and Touche, Vincent Hedley Lewis, explained: "They were selling that [offal] for about �10 an animal.

"They are now having to pay people to take that stuff away for �60. That makes a difference of �70 a beast."

Finally, two consecutive years of record global wheat harvests have caused a glut and the crop's price has collapsed.

The countryside's familiar 'patchwork' is threatened

Despite heavy European Union subsidies, many UK farms are unlikely to survive.

Many farmers believe that, in order to survive, farms will have to be larger with fewer labourers, but this has potentially disastrous consequences for the British countryside.

Mr Phalp summed up the situation: "There will be more cattle roaming larger fields and all your traditional hedges and fences and stone walls - there won't be time to maintain them.