The latest compromise plans to reform the EU Common Agricultural Policy (CAP) have been firmly rejected by Ireland's biggest farming bodies.
Negotiations concluded today in Luxembourg leaving EU ministers to consult their own national lobby groups about the ramifications of Farm Commissioner, Mr Franz Fischler, last offer for reforming agricultural policy.
The final draft yields some ground in his vision for breaking the link between subsidy and production, known as decoupling.
The offer should pave the way for a deal to shape European farming for the next 10 years but must now be agreed by the EU's member states. Many are highly sceptical about his reform plans.
The Minister for Agriculture, Mr Walsh, said the proposals needed some clarification but the decoupling proposal in the dairy sector was unacceptable.
Macra na Feirme, who have had a delegation in Luxembourg for the past week lobbying on behalf of young farmers, reacted with disappointment to the news. The Macra president, Mr Thomas Honner, said: "The price cuts of 32 per cent on the dairy side would be unsustainable for Irish dairy farmers and there are also a number of other issues which will have to be addressed."
Mr Pat O'Rourke, president, of the Irish Creamery Milk Suppliers' Association (ICMSA) said the current modified proposition is worse than the original proposals.
"These compromise proposals must be rejected totally by Minister [for Agriculture] Walsh. These proposals could cut dairy farmers incomes by over 55 per cent when fully operational in 2008," said Mr O'Rourke.
"Minister Walsh needs a public demonstration of full support from the Government at this vitally crucial time for farmers and the food sector. I restate the ICMSA calculation that the proposals would lead to combined losses for farmers of over 1.7 billion by 2012," he continued.
The Irish Farmers' Association (IFA) objected to the decoupling proposals. However, the Irish Cattle and Sheep Farmers' Association (ICSA) said it is committed to supporting Mr Fischler's proposals for full decoupling.
The ICSA president, Mr John Deegan, called on the Minister for Agriculture, Mr Walsh, to accept the 100 per cent decoupling option in the compromise paper. "The alternative option put forward in the paper which allows member states to retain 30 per cent of payments linked to production is complicated, unnecessary and bureaucratic and does not achieve the full benefits of full decoupling for Irish farmers," said Mr Deegan.
Widely criticised for distorting world trade and holding back agriculture in developing countries, the 40-year-old CAP eats up nearly half of the EU's entire budget of almost €100 billion a year.
Mr Fischler suggested that 75 per cent of subsidy payments for cereals and oilseeds should be made independent of production, while the remaining 25 per cent could retain this link.
Member states would need to justify production-linked payments, which would have to be hardship cases such as remote rural regions where there was a risk of farmers abandoning land.
"The modified proposal would thus limit the level of coupled (production-linked) support to producers in areas facing the highest risk of production abandonment, while at the same time allowing those with the highest productivity to reap the full benefits of the newly proposed system," the paper said.
For livestock, Mr Fischler offered an option of keeping 30 per cent of payments linked to production, again for hardship cases. Ireland and France have repeatedly voiced concern about this sector.
After failure to agree today, a spokesman for Mr Fischler said: "Make no mistake, our flexibility is now almost exhausted. Shopping lists and further requests are unacceptable as they cost money which we haven't got."
The 15 farm ministers will try to thrash out a compromisebehind closed doors later this week.