Deal to trim biggest payouts completes EU farm policy reform

European Union negotiators have agreed on a five per cent minimum reduction in subsidy payments above 150,000 euros a year to individual farms, in a deal which finalizes sweeping reforms to the EU’s common agricultural policy (CAP).

Under the deal struck late Tuesday, EU governments will have the option of capping individual payouts at 300,000 euros a year. The two other institutions in the talks — the European Parliament and European Commission — had wanted a mandatory cap.

Most elements in the complex overhaul of the 50 billion euro-a-year (US$67 billion) CAP were agreed by EU negotiators at the end of June. Among the changes agreed were new environmental requirements for farmers and an end to EU sugar production quotas from 2017.

Tuesday’s deal on the remaining issues dispelled any fears that payments to farmers would be disrupted if the legislation was not in place by the start of next year, when the reforms begin to enter force.

“I am delighted that we have now been able to finalise the reform as a whole,” EU agriculture commissioner Dacian Ciolos said in a statement.

“This is important for European farmers as it provides them with greater certainty for the coming year.”

Other parts of the deal were in line with an agreement struck by EU leaders in February on the bloc’s long-term budget for 2014-2020, of which the CAP remains the largest single item.

That includes plans to reduce somewhat the disparity between producers in Italy, Belgium and the Netherlands who receive more than 400 euros per hectare on average, and those in the Baltic states such as Lithuania who get less than 150 euros per hectare.

The deal must now be formally rubber-stamped by EU governments and the parliament before the reforms begin to bite from next year. Changes to the direct subsidies paid to farmers — worth about 40 billion euros a year — will only take effect from 2015.

– Reporting for Reuters by Charlie Dunmore in Brussels, Belgium.