EU reforms farm aid to Mediterranean

Europe’s farm ministers struck a deal overnight to reform subsidies for the so-called Mediterranean products: tobacco, cotton and olive oil.

Brussels had been seeking to sever the link between direct subsidies and production, but countries such as Spain and Italy had opposed such moves.

Tobacco was the main bone of contention with ministers agreeing to cut all crop-based subsidies but granting a longer transition period until 2010.

Farmers will still receive financial support by means of a “restructuring fund” to encourage them to switch to alternative crops.

Ministers also agreed on partial cuts for the less controversial crops: cotton and olive oil.

Cotton producers will see 35 per cent of aid still linked to their crop, while the rest will be granted as a single flat-rate payment.

Similarly, olive oil producers will receive 40 per cent of their aid based on production levels, with 60 per cent coming as direct income support.

Farm ministers agreed that the reforms, which kick in a year later than planned in 2006, will be “budget neutral” meaning that the €43 billion farm budget will remain unaffected.

"Negotiations were very tough," said an EU spokesman of the talks which finally ended at 4.30am.

"But we got a very good, balanced deal."

He also expressed regret that Spain voted against the reform package despite several generous offers made as a "political gesture".

"Nobody should say that the [Irish] presidency, the member states or the commission tried to isolate Spain," he said.

One source added that there was “unexpected flexibility from Brussels” on the reforms.

A representative of the producers group COPA-COGECA called the overall reform “positive” but was worried that the level of aid for cotton “is not enough to keep people producing the crop”.

The tobacco reforms are “not too bad”, she added, “permitting the maintenance of production until 2010.”

She also broadly supported the changes to the olive oil sector which “took into account the objections raised by the European Parliament”.

This latest decision brings the three sectors into line with the June 2003 reform of the Common Agricultural Policy.

The reform policy was aimed at making the cash-rich agriculture sector more market-orientated and stopping billions of EU funds funding overproduction.

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