Hundreds of miles from Surrey, Scotland�s hill farmers feel the effects of the latest outbreaks of disease. By Torcuil Crichton in the Borders

You think of modern farming being very high-tech but in reality hill farming is very tied to the seasons," says Nigel Miller. "The lambs have to go at a certain time of year because the grass is growing and you have to divert the herbage and the grass to your breeding ewes. You can't buck nature's calendar and if you miss the deadlines there are quite severe knock-ons for the next season and the welfare of the animals."

Miller, a Borders hill farmer, has neatly described the bind farmers are in now that a fresh outbreak of foot-and-mouth disease (FMD) has been confirmed in Surrey, just a week after the government declared the country free of the disease.

Although his Stagehill farm near Galashiels is several hundred miles from the two farms in Egham affected by foot-and-mouth, Miller and thousands of other livestock farmers are trapped, while the seasons roll on.

Exports of live and slaughtered animals, a trade worth £2 million a day, has been halted again and worse still farmers are unable to move their animals from pastures they should now be preparing for next year's breeding stock.

"This is the time of year hill farmers are moving lambs or calves to other farms to allow breeding lambs or tups to go to other pastures," explains Miller. "That's been curtailed completely and animals are stuck in the wrong place. Feed supply is a welfare issue and the other knock-on effect is that normal breeding plans and business arrangements are disrupted and pushed back."

The Scottish government, in common with the Welsh Assembly, has taken a slightly different tack from the UK Department for Food and Rural Affairs (Defra). Since the second outbreak was confirmed the Scottish administration has allowed, as it did last month, farmers to transport their stock direct to slaughterhouses to relieve pressure on grazings and keep the food supply going. Livestock from Scottish islands can also move to mainland farms under strict criteria.

The same licensed movement of stock - from farm to slaughterhouse - was introduced in England, outside the restricted Surrey area, from midnight last night in what Defra sees as a pragmatic approach to this new and unexpected outbreak of the disease.

The measures will only bring limited relief to farmers like Miller in the Scottish Borders, as taking animals to slaughter is not what they do in large measure at this time of year. It is the wider shutdown of the livestock industry will mean a severe financial squeeze for hill farmers.

"This is not just the most critical time of year for stock movement, about 70% of income for hill farmers is derived from sales over the next few weeks," says Thomas Binns, a farmer from Clitheroe in northeast Lancashire.

Binns, who chairs the National Farmers' Union's livestock board, says several factors will pinch the industry in the weeks ahead. "The cashflow implications are tight," he warns. "You can imagine if 70% of your annual salary was stopped for six weeks."

He adds: "October and through to November is when the sheep are mated for the next season. It's a process that requires grazing planning, about stock being moved on to reduce pressure on fields. It's quite a complex process."

Even with a swift end to the crisis, due process will have to be followed before British animals can be exported to the rest of the EU, a market worth £2m a day. The market for breeding and store animals, that will winter on farms, is estimated at £1.5m a day in the UK.

English farmers feel there was an element of political point-scoring in the way last month's outbreak was handled by the Scottish and Welsh administrations. But this time they welcome the lead taken by the devolved administrations and praise Defra for relaxing the ban on movements to slaughterhouses.

Defra is being more pragmatic this time about the risks, says Binns.

"There is enough restriction in terms of lost exports but it is important the bulk of the country gets back to some kind of trading regime, albeit licensed, at this time of year. The best-case scenario is that we'll be back to normal in a month."

It was only eight days ago that an element of normality returned to the market after the last outbreak. But when the first sale was held in Oban, after restrictions were lifted, the signs were not good. Prices opened at £20-£24 for blackface lambs - a reduction on the same time last year - and ewe lambs were as low as £26-£28 a head.

"Bank accounts are under strain anyway, our lamb prices are lower than last year and they've already taken a hit with the first outbreak of FMD," says Miller. "Now can't sell anything so most of our lambs are not going to find buyers."

This will not just lead to further pressure on grazing but also to a glut of lambs onto the market in the winter or early spring, which is likely to depress prices further. Even without foot-and-mouth, for livestock farmers like Miller the numbers don't add up: feed costs for cattle have increased by 14%-18%, and the expectation is that the market could be down £100 per calf on last year.

"If that happens then people like me are in trouble," says Miller.

It's not all a hard luck story, though. Livestock farmers feel that if they can weather this there might be rewards. The lot of dairy farmers, under the financial cosh for years, has improved, so a farm of 100 milking cattle would now be a viable proposition. Unfortunately it was mostly farms of that size that went under when gate prices were below production costs for a number of years.

The grain market has moved phenomenally in the last few months which is good news for cereal farmers. Grain has doubled in price, but that makes it more expensive to feed cattle over the winter.

"Livestock farmers are still waiting for the market prices to replace the fall in support structures," says Binns.

Reform of the Common Agricultural Policy, which replaced headage payment with single farm payments, has affected incomes but has also meant farmers can change their enterprise without taking an immediate hit on their income.

In some parts of Scotland that has meant the end of conventional farming. There are big areas west of the A9 in the Highlands which have now been emptied of sheep, and ewe numbers on Scotland's hills have dropped dramatically.

"The livestock farmer is feeling the pinch and that undermines confidence, people can't see into the future," says Binns. "Cereal and milk have gone up but the meat sector has seen nothing but increased costs, then it's hit by being closed down for three months."

FMD has compounded a number of pressure points on the industry, but livestock owners may take some comfort from the farmer at the centre of last month's outbreak. Roger Pride, whose cattle were slaughtered after being infected with FMD that leaked from the nearby Pirbright laboratories, is reopening his farm this weekend. Unable to restock himself yet, Pride sourced meat from local suppliers and refurbished his shop in Elstead, Surrey.

At the time of the first outbreak he said he was "devastated" but now, like many in the farming community, he is just angry the virus was leaked from a government-licensed establishment.

His advice to other farmers is not to give up. "Try to look to get through it and think positive," says Pride. "You feel angry but there's no point dwelling on it. We want to get on and make a living again."

Back in the Borders, Miller agrees farmers have to live with the outcome of foot-and-mouth and plan ahead."In my part of the world there is real uncertainty about the future. I'm very much a breeder, but if things don't change I have to look at reducing numbers," he says.

"I have two sons interested in farming so that makes a big difference when I look to the future. I have a reason to hang in there but if you're in your 60s, and you have no succession, then to see money draining away with no chance of profit makes no sense. Some farmers will take the stress out of their lives and get rid of their stock after this is over."