Rome, Paris, Madrid sign EU farm budget deal

Tue Oct 16, 2012 11:14am EDT

* Agree to keep EU agriculture budget in 2014-2020 period

* Deal sealed in Rome comes after Germany approval last week

* Ask to extend food aid scheme for poor, Berlin disagrees

* Italy does not support maintaining sugar quotas until 2020

By Sybille de La Hamaide and Catherine Hornby

ROME, Oct 16 (Reuters) - France, Italy and Spain on Tuesday agreed to try and keep the European agriculture budget stable after 2013, echoing a similar pact between Germany and France last week, but Italy declined to support a wish to maintain sugar quotas until 2020.

The farm ministers of the three countries met on the sidelines of a food security conference at the United Nations' Food and Agriculture Organisation (FAO) in Rome.

The European Commission has proposed to freeze spending under the Common Agriculture Policy (CAP) to the nominal level of 2013 for the 2014-2020 budget but the proposal still needs to be approved by finance ministers and heads of state.

"There is now a common basis on which we will be able to negotiate, work with the European Commission," French Agriculture Minister Stephane Le Foll said after the meeting.

Germany and France last week endorsed the European Commission proposal for a spending freeze.

Italian Agriculture Minister Mario Catania also stressed that the deal came as the final phase of negotiations on the common agricultural policy was approaching.

"There is quite a significant convergence between Italy, France and Spain on all the main questions, above all the defense of the EU farm budget, which is a key point," he said.

At 55 billion euros ($71 billion) a year, the farm budget consumes more than 40 percent of the EU's total annual expenditure, more than any other sector.

Le Foll said that the trilateral deal was about 85 percent in line with the Franco-German agreement sealed in Berlin last week, with two major changes, mainly that Italy did not want to maintain EU sugar quotas until 2020.

"Italy eats sugar but does not produce much, so they are not very interested in the extension," he said.

The Commission proposed an end to sugar production quotas and minimum beet prices from 2015.

EU AID FOR THE POOREST

Another difference concerned the EU-funded food aid scheme that supplies food to millions of poor Europeans.

As opposed to Spain, Italy and France, Germany objects to an extension of the scheme whose budget would amount to 3.5 billion euros ($4.5 billion) over seven years as they see that as a social policy, which does not fall under EU prerogative.

The food aid scheme was introduced in 1987 and was originally designed to divert part of the bloc's mountains of grain and butter to help feed poor citizens.

Reform of the CAP from the 1990s onward slashed the size of the so-called intervention farm stocks, and the scheme was revised to allow the Commission to buy food aid from the market when the stocks were low.

A ruling last year that said it could not be funded directly from the EU budget forced the Commission to slash funding for 2012. Heavy lobbying, led by France, the largest beneficiary, had the scheme extended by one year but Germany, which does not benefit from the aid, now wants it stopped.

"The idea was never social policy. Now this whole thing has changed because money is being used to actually to buy food and give it to those in need and that is social policy and this is the responsibility of the individual member states," German Agriculture Minister Ilse Aigner told reporters.

She also stressed that the final CAP budget would eventually depend on negotiations of the heads of state.

Officials hope to conclude negotiations on the EU's next long-term term budget, worth almost 1 trillion euros ($1.3 trillion) over seven years, by the end of this year with EU leaders due to discuss the issue late November in Brussels.

($1 = 0.7730 euros) (Reporting by Sybille de La Hamaide)