The Union, which has sought meetings with DARD on this issue over recent months, also claims that the department have failed to properly consult the agriculture industry on how the scheme could be developed.
Changes to the FMS are at the insistence of the EU Commission which ordered that the scheme's Tranche One 'first come first served' approach must be amended to incorporate an applicant selection mechanism in Tranche Two.
The first Tranche of the Farm Modernisation Scheme caused widespread problems as farmers across the province were forced to queue, many of them staying out overnight, outside offices to get their applications in first.
Commenting on the programme, UFU President Graham Furey raised his concerns at DARD's handling of a 'very important issue'.
Mr Furey said: "There has been no consultation with industry on how the second Tranche of the Farm Modernisation Scheme could be developed. This is not good enough.
"More than 400 UFU Policy Committee members have spent many hours deliberating on how a fair and effective delivery mechanism can be developed for the Farm Modernisation Scheme. However DARD have failed to meet the UFU to hear our views, despite our repeated requests since last October for an official meeting. Instead DARD have presented what appears to be an unacceptable 'eleventh hour fait accompli' to the industry."
Mr Furey said the UFU were totally opposed to key elements of the DARD proposals, particularly a 'weighted scoring mechanism'.
He continued: "DARD have proposed that applications should be selected, based on a weighted scoring mechanism, which in our assessment will significantly disadvantage many applicants.
"The UFU has developed proposals which we believe would allow as many farmers as possible equal access to this important funding. In contrast DARD have proposed a scoring mechanism with applicants in Less Favoured Areas scoring heavily while lowland farmers would receive no points in this category. This blatantly disadvantages lowland producers, despite the fact that they too contribute to Modulation funding which underpins the scheme and have an equal need to continue the process of modernising their businesses."
He added: "In effect all lowland producers are being denied a fair and equitable opportunity and will now be virtually excluded from Modernisation Funding. All UFU Policy Committee's, including our Hill Farming Committee agree that land classification should not be used as a criterion."
The UFU also outlined concerns about DARD proposals to weight the extent to which individual grant items have a 'modernising effect' claiming this has the potential to add further problems to the scheme implementation and is seeking more details from DARD.
Mr Furey said that UFU representatives will be in attendance at next week's NI Rural Development Programme Monitoring Committee when DARD will present their proposals in the presence of an EU Commission Official. He also confirmed that the UFU would strongly oppose the proposals.
In response a DARD spokesperson said the farm modernisation programme aims to contribute to improving the competitiveness and economic performance of agricultural and horticultural businesses, adding that the UFU would be consulted, along with other industry representatives.
"It is proposed that Tranche 2 of the Programme will target disadvantage by providing assistance for the modernisation of farm and horticultural businesses operating in marginal environments. This is reflected in the scoring criteria which will require applicants to demonstrate genuine disadvantage and the need for modernisation to help them become, or remain, competitive, while working in a challenging environment," the spokesperson explained.
"The need to introduce selection criteria and various options for those criteria were discussed at a meeting between DARD officials and UFU representatives, in June 2009, and the Union undertook to consult its membership. There will be further consideration at a meeting of the Programme Monitoring Committee, next week. The UFU, which is represented on the committee will have every opportunity to present its views on the day.
"In addition, DARD will be consulting with the UFU and other industry representatives on the categorisation of the modernising effect of items of plant, machinery or equipment and the list of eligible items."
News of the UFU's opposition to DARD's Farm Modernisation Scheme proposals comes days after Agriculture Minister Michelle Gildernew said she had 'learned lessons' from the first tranche.
The Minister told a briefing of agriculture journalists at Stormont on Monday that the opening of the Farm Modernisation Scheme had demonstrated the willingness of farmers to invest in modernising technologies and equipment to improve the competitiveness of their farm businesses.
She added: "The difficulties at the programme's opening, caused by insufficient funding to meet the huge demand, have taught us lessons for the roll-out of the second Tranche of the programme."