EU to Restructure Farm Subsidies System

STRASBOURG, France -- The European Commission on Wednesday presented plans to shake up the way the EU gives billions of euros in handouts to farmers and scrap decades-old rules limiting how much farmers can grow -- part of efforts to bolster Europe's production amid global food shortages.

The EU executive proposed capping subsidies for large farms and using the money saved for smaller-scale rural development. The plan also suggests a gradual increase in quotas on the production of milk before they are totally scrapped in 2015, envisages that farmers will no longer be obliged to set aside 10 percent of their land due to overproduction, and foresees changes to the market intervention system.

Currently, 20 percent of farmers receive 80 percent of the direct farm subsidies in the EU's 27 member states. More than 40 percent of the EU's 100 billion euro-plus ($155 billion) annual budget is spent on farm subsidies -- traditionally a part of the budget that is set years in advance. France is the biggest beneficiary.

EU Agriculture Commissioner Mariann Fischer Boel said the modernized common agricultural policy should allow farmers to meet growing demand for food and respond to market forces.

"It also aims ... to give our farmers the tools to handle the new challenges they face, such as climate change," she said in the European Parliament.