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EU executive unveils "green" farm policy vision

BRUSSELS (Reuters) - The EU executive adopted plans on Thursday that will force farmers to do more to protect the environment in order to justify public subsidies, despite farm unions warning that could threaten their economic viability.

In a policy paper on reforming the EU’s common agricultural policy (CAP) from 2013, the European Commission said linking direct subsidies -- currently worth about 40 billion euros ($54 billion) a year -- to new “green” objectives would help justify the costly policy to EU taxpayers.

“The CAP has never been so close to a crisis of legitimacy as it is today,” EU Agriculture Commissioner Dacian Ciolos told EU lawmakers in Brussels. “This is an opportune moment to refocus (the CAP) in line with the expectations of society.”

But EU farmers’ union Copa-Cogeca said the Commission’s focus on “greening” the CAP risked undermining EU food production by increasing farmers’ costs.

“The only concrete proposal in the paper is to add more costly (environmental) burdens onto EU farmers,” said Copa President Padraig Walshe. “Increasing costs lowers incomes and will have a devastating effect on production,” he told a news conference in Brussels.

The Commission will present its plans to EU farm ministers on November 29, with a formal response from EU governments expected early next year ahead of the Commission’s legislative reform proposals due in July.

France’s farm minister Bruno Le Maire said many of the ideas floated in the paper reflected a joint Franco-German position on the CAP reform agreed in September.

German farm minister Ilse Aigner called the paper “a good basis for further negotiations on a national and European level.”

Britain would have liked to see a greater recognition in the paper of the fiscal and economic challenges facing the EU, a diplomatic source said on Thursday, referring to the deep cuts in public spending being made by many EU governments.

“Whilst recent reforms to the CAP reflect the right direction of travel, this needs to be accelerated, promoting greater competitiveness (and) efficient use of taxpayer resources” a British government spokesman said.

Environmental groups gave the paper a cautious welcome, with Friends of the Earth calling it a “long-awaited step toward a more people and planet-friendly food and agriculture policy.”

BUDGET QUESTIONS REMAIN

Lawmakers in the European Parliament -- which will have an equal say in the reform with EU governments -- criticized the paper for its lack of detailed proposals.

“The Commission’s paper is so widely drawn that nearly everyone will find something in it that appeals to them,” Scottish liberal MEP George Lyon said.

The most glaring lack of detail was on the future size of the CAP budget, currently worth about 55 billion euro ($74 billion) a year.

The EU executive is due to publish proposals for the bloc’s next long-term budget from 2014-2020 early next year. Few expect a drastic cut in farm spending, though many believe the Commission will try to reduce CAP spending to fund new priorities.

“The real threat of big budget cuts still hangs over the whole policy debate, and the final decision on the budget will have a profound impact on the final outcome,” Lyon said.

France, Spain and other traditionally pro-CAP governments have pledged to resist any moves to cut the CAP budget, pitting them against Britain, Sweden and others who want to limit EU spending and refocus it on economic growth and innovation.

LIMITING PRICE VOLATILITY

Other proposals floated in the paper include limiting the level of direct subsidies paid to individual farms, and ensuring that only active farmers are eligible for EU subsidies.

But Germany’s Aigner said a limit on direct subsidies to individual farms was “not in the interests of German agriculture,” given the high number of large farms in the economically-weak east German regions.

The Commission also called for a fairer distribution of subsidies between old and new member states, with direct aid currently varying from more than 500 euros ($674.9) per hectare in Greece to less than 100 euros in Latvia.

The paper ruled out an EU-wide flat-rate subsidy, but said farmers in all countries could receive a minimum percentage of the EU average rate -- currently about 250 euros per hectare.

“We have to ensure that this rebalancing is acceptable to those who will be on the receiving end of reductions (and) will not entail an over-abrupt change for certain farmers,” Ciolos said.

Le Maire said France would oppose any bid to weaken direct subsidies, while Germany’s Aigner said any redistribution must be limited and phased, and was dependent on the overall size of the future EU budget.

Market management tools such as export refunds should be kept as a “safety net” against growing price volatility, the Commission said, but new tools such as public-private funded harvest insurance and mutual funds could also be introduced.

Additional reporting by Michael Hogan in Hamburg and Gus Trompiz in Paris, editing by Rex Merrifield and William Hardy

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