Massive cutbacks in the levels of EU farm price guarantees were confirmed yesterday as the key ingredients of the Agenda 2000 Common Agriculture Policy reform.
In an attempt to bring farm prices down to world market levels, the Commission proposed a cut of 15 per cent in butter and skimmed milk intervention prices, 30 per cent in beef, and 20 per cent in cereals.
The milk cut is up 5 per cent on that proposed in Agenda 2000 last July.
The proposals continue the reforms started by the former agriculture commissioner, Mr Ray MacSharry, in switching EU aid from price support to income support - in effect from consumers to taxpayers.
Fears of massive surpluses and the refusal of world trading partners to accept more subsidised exports on to world markets mean that reform is inevitable; at stake is how much compensation farmers can wring from the EU for their losses in income.
The Farm Commissioner, Mr Franz Fischler, said he hoped the proposals would be approved by ministers before the end of the year and that the reforms would allow the EU to play a much more aggressive role in the next round of World Trade Organisation negotiations.
Compensation will be paid to farmers, the Commission suggested yesterday, through increased direct income payments but only at rates of 50 per cent of the price fall for cereals, 80 per cent for beef, and 70 per cent for dairy producers.
This is because the Commission insists that actual prices are unlikely to fall all the way to the intervention level and it faced serious criticism under the previous budget for over-compensating farmers for price falls that did not happen.
The cereals price cut will happen in one go in 2000, while those in milk and beef are to be phased over four and three years respectively. A new dairy cow premium will also be introduced.
Member-states will be give greater discretion over how the compensation is spent: 50 per cent of the increase in premiums will be given to national administrations to distribute as they see fit.
The "deseasonalisation" premium for steers will continue, while the calf-processing scheme will be abolished. Some additional payments for low-density farming may also be available.
Milk quotas are to be increased by 2 per cent, but the increases will be targeted at young farmers and those living in mountainous or Nordic areas. Compulsory set-aside will be reduced to zero, while voluntary set-aside will continue at the same level of payments as cereals and may be guaranteed for five years to enhance the environmental benefit.
The Commission is suggesting a "degressive overall ceiling" on direct aid payments to farmers to deflect charges that its policies are unduly generous to wealthy producers - a 20 per cent reduction in payments between ú80,000 and ú160,000, and 25 per cent on sums above that.
The reform package also includes a substantial refocusing, simplification, and integration of rural development programmes to prevent duplication and ensure consistency of approach.
These include structural adjustment measures to aid early retirement and training of young farmers, support for less-favoured areas, cash for environmental activities, support for investment in processing and marketing, aid for forestry and rural conversion. The other area to see significant reform is the olive oil sector.
Yesterday tens of thousands of Spanish farmers demonstrated in Madrid against proposals to set quotas for production based on three years of drought.
Mr Fischler denied that the choice of reference years made any significant difference to the figures.
