Claims that the UK's Coalition Government wants an early end to direct payments to farmers following the reform of the Common Agricultural Policy (CAP) were "complete nonsense", Agriculture Minister Jim Paice has told a Farmers' Union of Wales lunch at the House of Lords.
"There are some stories about that we want to see the end of direct payments, as if by tomorrow," Mr Paice said at the union's annual function to promote Welsh food during Farmhouse Breakfast Week.
"That is complete nonsense and an absurd proposition. Farming couldn't survive without direct payments but we need to be more ambitious in the future and I hope that when we publish our proposals we will be suggesting a long, long transition from the current CAP system."
Earlier, Mr Paice acknowledged the devolved Welsh, Scottish and Northern Ireland governments had already called for the retention of direct payments and market support measures in their responses to the EC's consultation on CAP reform.
"In some cases their responses are different from Defra's but we do agree in many more areas. When we put together our final response next week it will include views that are very different from what the Press has been saying.
"All the projections show that we are going to need more and more food. Only this week the UK Government's chief scientist published a report - which is quite shocking - of a vision he sets out of our food requirements over the coming years."
The lunch was sponsored by Welsh red meat promotion agency Hybu Cig Cymru (HCC), the Welsh Assembly Government and NatWest Rural Banking Wales.
HCC chairman Dai Davies told the gathering of Welsh peers, MPs and rural business organisations that farmers are facing an all out assault from the 'Three Fs' - feed, fertiliser and fuel.
"Inflation for everyone has risen substantially recently, but farmers have seen major inflation increases that are well into double figures over the last 12 months.
"Despite the current buoyant market prices for lamb, the average Welsh farmer is still only marginally covering his costs of production. This is largely due to the fact that the price of the 'Three Fs' has sky rocketed."
Mr Davies revealed that fertiliser costs had gone up by up to 25 per cent in some cases over the last year, with some producers reporting paying £350 a tonne in January compared with £290 a tonne at the same time last year.
The worldwide demand for wheat has also impacted on feed costs, which are on average 25 per cent higher than at the same time last year. Many are now paying around £230 a tonne for feed compared with £180 last January.
And while motorists and hauliers are feeling the pinch at the pumps, farmers have also seen a dramatic rise in the cost of red diesel, up by a third from 54p a litre last year to 75p a litre now.
"Day to day costs for farmers in Wales have shot up and only sustainable prices at the markets will help offset these huge rises in commodity prices," said Mr Davies.
"HCC is encouraging farmers to examine all their costs to see if there are any areas where they can make savings, and also to use their resources in the most effective way possible in order to create a business that runs as efficiently as possible.
"The whole industry is feeling the pressure from the increase in fuel costs, but with farmers also struggling with the rise in fertiliser and feed, it is essential that the prices received at the markets remain strong."