Farmers will have to pay more to get rid of fallen stock during certain times of the year after the Government agreed to reorganise the way the scheme was subsidised.

The National Fallen Stock Scheme said that because of the scheme's popularity, the amount of discount available to farmers would have to be reduced from 35pc to 10pc, although prices would drop during peak periods.

But this has angered many farmers, who say that it is already too expensive to get rid of fallen stock and an increase in costs would put further pressure on their businesses.

NFU livestock delegate Malcolm Corbett, from Rochester, said: "As far as I am concerned we have got to look for an alternative to this current method of disposing of dead sheep. The economics of the job just don't stack up and it doesn't make any sense from a biosecurity or environmental point of view.

"If a hill farmer has a dead ewe it will cost him as much to get rid of it correctly as he would get for selling its lamb. And you've also got lorries travelling hundreds of miles across the countryside picking up dead animals, using up diesel and increasing the disease risk on farms.

"I appreciate that the disposal of dead cattle is a different story but we have got to look at an alternative on-farm disposal scheme for sheep, and by this I don't necessarily mean on-farm burial. There are other alternatives, such as water-tight tanks, where dead sheep could be placed into and allowed to decompose naturally.

"Also, the Food Standards Agency has recently come out and said that the latest science supports the facts that there is no risk of BSE in sheep so we hope, and are pressing for, the TSE regulations imposed on the sheep industry to be wound back. This would include the regulations on the disposal of sheep carcases."

Following the Bansback Report, it was announced last year that the National Fallen Stock Scheme would be extended by a year to November 2008 to allow Government and industry to use the existing funding over a longer period, and to ensure there is a smooth transition to a post-subsidy scheme.

However, the National Fallen Stock Company recently recommended to the Government that it decreased the discount to farmers for the collection and/or disposal of fallen stock under the National Fallen Stock Scheme from 35% to 10% from June 1, 2007 and introduced a seasonal increase in the discount to cover peak periods of usage in early 2008.

Michael Seals, the company's chairman said: "The board of the company has looked closely at the use of the Government contribution and decided that to enable it to remain within the £20m put forward by Government it is necessary to reduce the discount given to members from 35% to 10% from June 1, 2007, but to raise the rate early in 2008 to cover the peak periods of usage during the spring of that year. This ... will allow us to continue to offer a valuable service to all of our members."