Farm ministers seek compromise subsidy deal

EU agriculture ministers started a new round of complex, politically sensitive talks today on reforms of the €43.4bn farm subsidy programme.

The reforms are meant to strengthen Europe’s position in world trade talks by breaking a decades-old link between output and subsidies blamed for creating food surpluses that undercut competitors and squeeze producers in poor countries.

Last week, three days of haggling ended in deadlock with France resisting proposals that would mean farmers would no longer automatically get more handouts for producing more food.

EU officials were optimistic the third round of talks this month would bring a breakthrough.

“This week we are in for a deal,” said EU spokesman Gregor Kreuzhuber ahead of the talks in Luxembourg.

“Everybody has to move. We want a proper reform that gives our farmers planning stability and gives us a very strong hand in the negotiations in the World Trade Organisation.”

Kreuzhuber said he did not expect Greek Farm Minister Georgios Drys, whose country holds the EU presidency, to draft a new compromise before Thursday, after hearing out all sides tonight.

The EU farm subsidies system is much-criticised by the United States, Australia and Canada who say it violates world trade rules.

EU Agriculture Commissioner Franz Fischler has pushed the 15 EU governments hard to bring their subsidies in line with WTO rules and clear the way for trade talks to open world agricultural markets.

The Netherlands, Sweden, Britain and others back Fischler’s reforms. France, Ireland and Spain seek to water down the proposed changes.

Spanish Agriculture Minister Miguel Arias Canete said he would fight to secure a “satisfactory accord” during the talks that are expected to stretch into late Thursday.

France and the others have rejected a compromise that included allowing countries to keep aid tied to output levels for up to 25% of subsidies for cereals and 30 percent of beef subsidies.

Other subsidies would be paid at a flat rate depending on the size of farms rather than how much they produce.

French President Jacques Chirac said at an EU summit in Greece last weekend his government was willing to compromise.

EU nations have struggled for many years to overhaul their Common Agricultural Policy.

Pressure to reform has increased due to a crucial WTO meeting in September in Mexico.