SUPPORT payments to Scottish agriculture could be cut by up to #60m, the National Farmers' Union of

Scotland's general purposes committee heard yesterday.

The threat comes from the adoption of the euro by 11 European Union states and the lack of any mechanism to compensate the four countries, principally the UK, which have opted not to join yet.

An 11.4% cut in direct payments looks likely. All ''green'' payments will be cut from January 1, 1999, for those outside the single currency, unless Brussels can quickly devise some form of compensation.

Craig Campbell, the union's policy director, said: ''We need a system on January 1 which will stabilise intervention and direct payments. Over the last 18 months all the talk has been of the effects of the pound rising, but if it goes the other way there will be absolutely nothing

in place to adjust

payments.''

It seems possible that sheep farmers who have received the first two elements of the Sheep Annual Premium could find themselves subject to a claw-back on the final payment.

The mood at yesterday's meeting was one of growing despondency. Union president George Lyon and his deputies, Jim Walker and Peter Chapman, painted a bleak picture for every commodity. Beef prices are at their lowest in real terms for many years. Dairy farmers face the prospect of a further cut in returns.

Speaking of the cereal sector, Chapman added: ''There is real suffering with grain prices including arable aid at #70 per tonne compared to #100 10 years ago.''

However, he reserved his strongest criticism for the fact that 50% of eligible farmers are owed 5% of their area payments by the Scottish Office, a total of more than #5m.