The European Union on Wednesday agreed to reform the Common Agricultural Policy to favour small farms over big businesses which now stand to lose up to 30 percent of their current subsidies.
Details of Wednesday's deal have not been disclosed, but under a previous draft agreement member states would have to ensure that by 2019 each farmer receive at least 60 percent of the average national or regional subsidy per hectare.
As a result of the change in how entitlements are calculated, many of Europe’s largest and most productive farms could see reductions in payments by up to 30 percent – a cut that will aid small to medium sized farms in the region.
At present, 80 percent of the EU’s agriculture subsidies go to the top 20 percent of intensive farm businesses since existing rules still link subsidies to historical production levels.
EU negotiators also agreed that 30 percent of all future direct subsidies, which account for about three-quarters of the annual CAP budget, should be conditional on farmers' taking steps to implement certain environmental practices on their farms – including the maintenance of grassland, biodiversity and uncultivated spaces.
The EU however refused to place a cap on the amount of direct subsidies that can be paid out to individual farms, measures that were intended to balance payments across the EU and support small farmers.
"This is not a perfect reform, but it is the best we could put together," admitted Simon Coveney, Ireland’s minister of agriculture.
France, Europe's top agricultural producer, will continue to receive the largest share of CAP funds at around 8 billion euros a year, followed by Spain and Germany each with about 6 billion annually.
The CAP, which began in 1962 as a way to increase food production, will set the direction from 2014 to 2020 for farmers who produce 20 percent of the world’s wheat, milk and pork, as well as 11 percent of its sugar and beef and account for 30 percent of global cheese exports.
However, the agriculture programme also takes up nearly 40 percent of the EU’s long-term budget of 960 billion euros.
CAP reform is due to be implemented starting in 2014 but the new subsidy system would not be in place before 2015 due to delays in negotiations on Europe's next budget.