EU may cut subsidies for largest farms; Farm cuts

Europe's biggest farms will see their EU agricultural subsidies capped at E300,000 a year under draft proposals to reform the bloc's farm policy from 2014, according to a leaked draft.

The plan would cut the current E40 billion annual bill for direct farm subsidies by at least E2.5 billion, but is likely to face opposition from countries with large land holders such as Britain, Germany, and the Czech Republic.

EU governments rejected a similar cap in a 2007 reform of the common agricultural policy (CAP).

Other proposals in the draft European Commission reform include making a third of EU direct subsidies contingent on farmers meeting new environmental goals, and ensuring that only "active farmers" are eligible for support. The Commission said the E300,000 cap, as well as cuts to farm payments between E150,000 and E300,000, would address the current situation where large amounts of EU aid are paid to a small number of Europe's biggest farms.

"It is therefore fair to introduce a system for large beneficiaries where the support level is gradually reduced and eventually capped to improve the distribution of payments between farmers," the draft said.

France is the biggest annual recipient of EU direct aid at more than E8 billion, followed by Germany at E5.5 billion and Spain at around E5 billion, Commission data for 2009 showed. Under the proposal, the cap would be raised for large farms employing high numbers of workers, offsetting the impact on large co-operative farms in eastern Germany, for example. All savings generated by the plan would be retained by national governments to spend on other agricultural priorities, rather than returning to EU coffers, the draft said.