* Reform aims to make huge farm subsidies fairer, greener
* Largest farms set to be biggest losers
* Farm budget agreed but many details still to resolve
By Charlie Dunmore and Nigel Hunt
LUXEMBOURG, June 24 European Union negotiators
gathered on Monday for talks to finalise reforms of the bloc's
50 billion euro-a-year farm policy that could remove almost half
of the subsidies now given to some of its largest grain and
Many of the proposals are meant to make the 50-year-old
common agricultural policy (CAP) more fair and environmentally
friendly, to justify the huge sums paid to farmers each year.
But critics say EU politicians plan to reverse some of the
progress made in previous CAP reforms and the proposals could
harm Europe's food security.
Representatives from EU governments, the European Parliament
and the European Commission will hold two days of talks in
Luxembourg to agree the likely shape of the reform, before
reconvening in Brussels on Wednesday to seek a final deal.
Some of the toughest issues in the reform were agreed by EU
leaders in February, including the overall size of the farm
budget and the share each country will receive.
Agriculture will consume nearly 40 percent of the bloc's 960
billion euro ($1.3 trillion) budget for 2014-2020 - the period
covered by the reform - ensuring it remains the biggest single
item of EU expenditure.
Europe's biggest agricultural producer, France, will
continue to scoop the largest share of CAP funds at around 8
billion euros a year, followed by Spain and Germany each with
about 6 billion annually.
But there are many areas where governments and the other EU
institutions have yet to reach an accord.
Some governments want to water down moves to harmonise
subsidy payments based on the current size of holdings, rather
than on historical production levels as at present.
The present system disproportionately benefits those who in
the years 2000-2002 had the largest output, for example
industrial-scale grain producers in France's Paris basin.
The change could see the subsidies paid to some of Europe's
biggest grain and livestock farmers cut by up to 40 percent, EU
"This is a major issue for some governments. You're talking
about taking money away from some farmers and giving it to
others, which politically is very sensitive," said one EU
official involved in the talks.
As a result, France is leading a push to let governments
continue linking up to 13 percent of total subsidies to output,
which some opponents say goes against the spirit of recent
Governments oppose a mandatory cap on annual payments to
individual farms of 300,000 euros, which would also see the
biggest and most efficient producers lose out. The limit is
backed by the European Parliament and the Commission.
There is disagreement over the deadline for abolishing EU
sugar production quotas, blamed for pushing up domestic prices
and limiting European sugar exports due to global trade rules.
The Commission proposed an end to quotas in 2015, while
governments would prefer 2017 and the parliament 2020. EU
officials involved in the talks say a compromise of 2017 or 2018
is the most likely outcome, depending on the precise conditions.
All three institutions have agreed that 30 percent of future
direct subsidies should be conditional on farmers taking steps
to improve their environmental performance. But they disagree on
the precise measures and sanctions for non-compliance.
Governments and MEPs want to weaken the Commission's
proposal that farmers should leave 7 percent of their land
fallow. Farm groups have warned that the move could hit Europe's
Farmers that don't comply should only lose the 30 percent of
payments linked to the new measures, the parliament has said.
But governments and the Commission say that would effectively
make the rules optional, and have argued for tougher sanctions.
If the negotiators strike a deal on Wednesday as expected,
it must be rubber-stamped by the full parliament and EU
governments before entering force on Jan. 1 next year.
($1 = 0.7612 euros)
(Editing by Anthony Barker)