(Recasts, adds additional reaction)
By Jeremy Smith
BRUSSELS, Nov 20 (Reuters) - European Union governments
agreed on Thursday to divert chunks of long-standing subsidies
enjoyed by large farms into countryside preservation schemes in
the biggest revamp of farm policies for five years.
The early-morning deal came after concessions given by EU
Agriculture Commissioner Mariann Fischer Boel, most notably to
France, Germany and Italy, in an overnight session in Brussels.
The policy revisions will start in 2009 and run until 2013.
An EU official said there had not been full unanimity of the 27
EU states behind the agreement but did not name which country or
countries had refrained from backing it.
"You can count on the fingers of half a hand the countries
who had a different opinion," French farm minister Michel
Barnier told French news channel LCI.
"We have kept the regulation mechanisms and the governance
that we need, because we are talking about food, not cars or
telephones," he said.
Under the scheme, all farms subject to a basic threshold of
5,000 euros ($6,312) in annual subsidies will shift 5 percent of
their EU grants into countryside projects by 2012 -- Fischer
Boel had wanted 8 percent -- on top of 5 percent now in force.
Plans for a tiered system of annual income thresholds to
shunt subsidies from large farms to rural spending were diluted.
Instead of three income thresholds for farms receiving
subsidies, only one will now apply -- 300,000 euros and higher,
where 4 percent of subsidies will be moved into rural projects
by 2012. The outcome will be that big landowners will see their
payments clipped the most.
Despite the last-minute changes, it remains Europe's most
significant farm reform since 2003, which introduced the concept
of "decoupling" -- EU jargon for breaking the link between how
much farmers produce and the amount of subsidy they receive.
The old system was criticised in the developing world for
distorting trade and encouraging the over-production that
created the bloc's infamous "grain mountains".
These reforms reinforce the move towards full decoupling.
INTERVENTION LIMITS
They also cap the maximum amount of wheat which can be
delivered to EU intervention stores and allow an increase in
milk quotas in the build up to their abolition in 2015.
Fischer Boel agreed to set an annual ceiling of 3 million
tonnes for EU producers to sell bread-making wheat into public
stores. There had previously been no ceiling.
"It's distressing given that we've just seen a global food
crisis and are in the midst of a financial crisis," Philippe
Pinta, president of French grain and oilseed growers' group
ORAMA, referring to the limits on wheat intervention.
"In not even a year from now we are going to regret having
dismantled these mechanisms," he added.
Ministers agreed to increase milk quotas by one percent
every year in the lead up to abolition, raising concerns among
some dairy farmers, particularly in Germany.
"If this is implemented as announced it will end in a
catastrophe. We already have the situation in which we are
almost drowning in milk," Romuald Schaber, chairman of the
German dairy farmers' association, said.
Germany won the option to spend some of its rural
development cash to support the milk sector.
In a concession to France, which chaired the negotiations as
current EU president, the compromise deal allows more
flexibility to support the sheep and goat sectors.
Italy, the EU's leading offender in overshooting milk output
quotas, also got a deal on dairy by being the only country
allowed to take on the entire quota increase from next year.
Britain's farm minister Hilary Benn said the agreement was a
step in the right direction of further reform but also a missed
opportunity to speed up the process of change.
"This is a mixed result. On the big items of reform this is
a step forward, but I regret what has been conceded in order to
secure a deal which will lead to some new distortions in the
short-term," Benn said in a statement.
(Additional reporting by Ilona Wissenbach in Brussels, Valerie
Parent in Paris, Michael Hogan in Hamburg and Nigel Hunt in
London; editing by Mark John and Peter Blackburn)
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