The European Commission has insisted that proposals to reform the Common Agricultural Policy (CAP) will not necessarily lead to a cut in farmers' incomes.
But Commission sources confirmed that the Agriculture Commissioner, Mr Franz Fischler, remains determined to change the way the EU subsidises agriculture.
Mr Fischler wants to replace the present system of headage payments with a direct income subsidy based on farmers' earnings between 2000 and 2002. The farmer would receive this subsidy regardless of how much he or she produces but the payments would start to decrease from 2007.
A Commission source stressed that the money saved from 2007 would be available to farmers in the form of rural development subsidies. "What this simplified direct payment brings is income stability for farmers and the money saved from reducing the direct payment will not be lost to farmers. You can't describe this exercise as one of falling incomes for farmers," the source said.
Mr Fischler will present his proposals on January 22nd. Any reform must be approved by EU agriculture ministers before it comes into effect and a number of countries, led by France and Ireland, have made clear their opposition to a radical overhaul of the present system.
Mr Fischler's proposals have yet to receive the approval of the entire Commission and sources suggest they could be modified before January 22nd. But sources insist radical reform is the only way the EU can continue to subsidise farmers while fulfilling its commitments to the World Trade Organisation (WTO).
EU ministers agreed at a WTO meeting in Doha in 2001 to work towards substantial reductions in "trade distorting" support for farmers and to an eventual phasing out of export subsidies.
Developing countries argue that EU subsidies encourage farmers to produce too much food and to dump surpluses onto poorer markets.
The Commission insists reforms are needed without delay.
"The choice is simple: either we change the whole policy or you'll see direct payments cut," the Commission source said.
