The fact 300 people were once employed to count sheep is an example of red tape in the UK farm aid system, says a Tory-backed review of government waste.
There is too much red tape in farm subsides, says the report
Half a billion pounds can be saved by cutting bureaucracy at the Department of Environment, Food and Rural Affairs, says the report published on Wednesday.
But Labour says the Tory savings sums do not add up.
The idea of privatising the agency which hands out subsidies to farmers would be illegal, it says.
Labour Treasury minister John Healey said shadow chancellor Oliver Letwin had scored a "massive own goal".
"They are making up more dodgy figures about the government to mask their own plans for cuts, charges and privatisation," he said.
The proposals are not yet Tory party policy but are the latest part of a review of government spending headed by former Dome chief David James.
The review says £210m can be saved by the private sector taking over the cash handling part of the Rural Payments Agency, set up to distribute subsidies to farmers.
The cost of making the payments currently stands at 4% of their actual value, it says.
James committee member Tony Caplin told reporters: "Three hundred people were once employed to count sheep, but the move to Single Farm Payments means that subsidies will no longer be tied to the number of livestock.
"If this waste could be reduced, it would free up public money to achieve a genuine difference for rural communities."
The review also proposes scrapping the rule, established during the BSE crisis, that the government should buy cattle over-30 months old to take them out of the food chain.
Mr Caplin said neither vets nor the European Commission believed the rule was still needed.
Other proposals in the report include:
- Slimming down the Environment Agency by 1,286 staff by focusing it on core tasks and avoiding overlaps with other bodies
- Cutting backroom staff at the Defra headquarters by a third and moving delivery work to the executive agencies
- Ending the loss-making Forest Holidays scheme as part of a £36m rationalisation of the Forestry Commission.
- Selling off non-operational land owned by the British Waterways Board, such as wharves in London's Docklands - producing a £424m windfall.
Mr Caplin also said the Food Standards Agency should stop funding advertisements and promotions and concentrate on consumer protection.
He pointed to a e-mail Christmas card used by the agency in Northern Ireland which used an animated version of God Rest You Merry Gentlemen to promote a safe eating award.
Overall, the review says it can cut 5,205 civil service jobs - up on the 2,400 proposed by the Gershon review done for the government.
And the savings can produce £477m in savings on top of Gershon's proposals for £117m worth of efficiency cuts and another "questionable" £300 of savings, it claims.
Shadow chancellor Oliver Letwin said waste had contributed to 66 tax rises under Labour.
"A distressingly large proportion of that money has gone into feeding fat government which now needs to go on a diet," he said.
Mr Letwin said the Tories could be trusted on their waste-cutting promises because they would get government doing less.
Trade unions were right to complain about Labour's efforts to cut staff while government performed the same functions, he argued.
But Labour has hit back at the plans, saying privatising parts of Rural Payments Agency would go against EU laws which say subsidies must be paid out by government agencies or bodies.
Proposed savings from the Environment Agency came from a division funded by industry and which therefore would save taxpayers nothing, it says.
The party also attacked the proposed savings at the Food Standards Agency, saying it spent only £500,000 out of its £139m budget on advertising last year.
Rural Affairs Minister Alun Michael said: "The Tories' proposals are uninformed and potentially disastrous."