September 26, 2013

Under the deal, EU governments will have the option of capping individual pay outs at US$406,000 a year. The two other institutions in the talks - the European Parliament and European Commission - had wanted a mandatory cap.

Most elements in the complex overhaul of the US$67 billion/year CAP were agreed by EU negotiators at the end of June. Among the changes agreed were new environmental requirements for farmers and an end to EU sugar production quotas from 2017.

The deal on the remaining issues dispelled any fears that payments to farmers would be disrupted if the legislation was not in place by the start of next year, when the reforms begin to enter into force.

Other parts of the deal were in line with an agreement struck by EU leaders in February on the bloc's long term budget for 2014-20, of which the CAP remains the largest single item.

That includes plans to reduce the disparity between producers in Italy, Belgium and the Netherlands who receive more than US$541 per hectare on average, and those in the Baltic States, such as Lithuania, who get less than US$203 per hectare.

The deal must now be formally sealed by EU governments and the parliament before the reforms come into effect from next year. Changes to the direct subsidies paid to farmers worth about US$54 billion a year will only take effect from 2015.