EC aims to cut subsidy for biggest farms in 'green' plan

Plans for the biggest shake-up in the 40-year history of the common agricultural policy (CAP) will be published next month. A report from the European Commission says the system of subsidies for intensive farming, which costs £27bn a year, is no longer sustainable, particularly with the imminent expansion of the European Union eastwards.

In recommendations that will divide member states, it calls for a limit on subsidies to large farmers, with incentives paid to high-quality and environmentally friendly producers. The move will delight the Government – despite many British farmers benefiting from the CAP – and northern European nations such as Germany.

But the proposals are likely to encounter fierce opposition from France, the leading supporter of the CAP in its present form, Greece, Spain and Ireland.

Labour and Tory governments have repeatedly pressed for an overhaul of the CAP, which swallows up nearly half of the EU budget. They also say it is highly vulnerable to fraud, and protest that it encourages over-production of food.

If the system remains, spending would rocket when the EU expands in 2004 from 15 to 25 members, including agriculture-intensive nations such as Poland and Hungary.

Franz Fischler, the agriculture commissioner who drew up the proposals, says in the document:"A common agricultural policy that encourages surpluses which then have to be disposed of – at considerable cost – is no longer acceptable or sustainable."

He calls for a shift in funds from intensive farming, with savings redirected towards improving the environment and rural economies.

Mr Fischler says farmers should no longer receive EU payments relating to size of land or amount of livestock. They would be given a single subsidy conditional on good practice, including food safety and animal welfare.

He also proposes cutting subsidies to the largest farmers, with cash saved channelled into projects boosting the rural economy. A cap of £200,000 in subsidies for individual farms could be imposed. This would be opposed in Britain, which has many of Europe's biggest farms.