Calling for a review of Government spending on BSE, the committee said denying more aid to farmers could have "unintended harsh consequences for specialist beef producers, whose heavier finished animals are often not eligible for full compensation."
The committee said: "We think that farmers are right to expect the Government to treat them sympathetically."
The committee is chaired by Tory MP Peter Luff, but seven of its 11 MPs are Labour MPs and its findings cannot be brushed aside by the Agriculture ministers.
The MPs say that BSE could lead to a restructuring of the beef industry in Britain, with many farmers going out of business, but it says the piecemeal approach of Tony Blair's Government and previous ministers has failed to meet the challenge to the farming industry.
"Valuable time and money that could have been spent on restructuring the industry has been wasted for lack of a clear Government long-term strategy which would have assisted farmers to recognise the need for change," the committee said.
The committee was also worried that Dr Cunningham may be gradually withdrawing subsidy altogether. In evidence, the Agriculture Minister said he could think of no other product in the UK which received the same level of financial support as the beef sector, and appeared to rule out further aid.