The government sees the countryside as "politically hostile" and has so few rural seats it can afford to ignore farmers' concerns, Charles Kennedy said on Wednesday.

In a speech to the National Farmers Union, he claimed his party would deliver a "rural renaissance".

Kennedy issued a stinging criticism of Labour and the Conservatives. "I am not one of these people who believe that all the problems in British agriculture began on May 1, 1997. They did not. Farming in this country had been in some decline for a number of years before then.

"Tony Blair's government misunderstands the farming industry and the wider rural community, in part because it sees the countryside as politically hostile. And it has so few rural seats that it feels it can ignore rural concerns with relative impunity and with little electoral fall-out", he said.

He called on the government to take action on the high value of the pound. "In the short-term Labour must address the damage that has been done to farmers by the unfavourable exchange-rate. The high value of the pound against the Euro has made our agricultural exports more expensive and foreign imports relatively cheaper. It also means that you lose out on EU support because your CAP payments are calculated in Euros," Kennedy said.

He outlined how he would reform the CAP. "We will need to ensure that the bulk of CAP payments are moved from production subsidy to rural development payments. These payments can be made through a single Countryside Management Contract which would allow this country to decide the best way to administer the available funds, tailored more closely to the specific needs of our farmers.

"A Countryside Management Contract will allow farmers of the future to be much better rewarded for the services they provide the public outside the commercial market. Including support for agri-environmental and stewardship payments - rewarding farmers who engage in sustainable farming practice and environmental renewal," he said.

He offered ideas for short-term help."We also propose measures to help farmers now. Initiatives to promote the national network of farmers' markets as an outlet for farm produce should be forthcoming. Local authorities could be given the means to access rural development funds through Regional Development Agencies to fund and train farmers in retail health and safety standards, and marketing," he said.

Kennedy also vowed to cut red tape, promising "a cut in the number of farm inspections that take place each year, and reform the ones that are necessary by reducing the amount of form filling that farmers do as part of the process".

He believed the rural economy could survive - but only with government help. "Farming does have a future in Britain. And it could be a very bright future. But only if Government is prepared to work with farmers to get the best deal for farming in this country," he said.