SHEEP farmers will receive less than £2 as the second advance payment for the 2001 sheep annual premium scheme.

The NFU said farmers would be dismayed at the latest forecast, which fails to take into account the plight of the industry owing to foot-and-mouth disease.

The European Commission set the payment at 3.234 Euros - about £1.99 - based on a revised forecast premium for the year of about £6.75 at current exchange rates, down from an earlier forecast of £8.07.

"It is an insulting amount for sheep producers in England and Wales whose businesses have been decimated by the foot-and-mouth crisis," said Mr Tim Bennett, NFU deputy president.

"They have had no export market and, as a result, have seen their prices fall within the domestic market."

Meanwhile, he said, other European sheep producers had enjoyed large price rises because of the lack of British lamb on the Continent.

"UK sheep producers are being hit on four fronts: low market prices, low SAP payments and the effect of the strong pound as well as the extra costs associated with foot-and-mouth movement restrictions," said Mr Bennett

The low payment supported the NFU's view that the calculation of the SAP did not properly reflect the true position in the UK.

The NFU will continue to put pressure on the government and the commission to recognise the enormous difficulties faced by UK sheep producers.

"The failure of both the EC and the government to support sheep producers in the UK will result in irreparable damage being caused to the businesses of individual sheep producers and their families and to the rural economy," Mr Bennett said.