European officials meeting in Luxembourg have struck a deal to cut subsidies for big business farms and boost young farmers as part of a major overhaul of the EU's much criticised Common Agricultural Policy (CAP) due to start next year.
"On a lot of the big issues, we have agreement in principle," Irish Agriculture Minister Simon Coveney, chairing the discussions as his country holds the EU presidency, said on Tuesday.
Coveney voiced hope that a three-way meeting of the European Commission, Council and Parliament in Brussels on Wednesday could formalise the preliminary agreement.
Coveney said that a "stumbling block" over how to divide subsidies at the regional and national levels had been overcome, although he cautioned: "This deal is not done."
"There are still difficult issues to resolve. I won't pretend tomorrow it is going to be easy but today wasn't easy and yesterday wasn't easy," saids Coveney,
Under the current rules, 80 percent of CAP payments go to the top 20 percent of intensive farm businesses since several countries still link the subsidies to production levels.
Under the new proposal, member states would have to ensure that by 2019 each farmer receive at least 60 percent of the average national or regional subsidy per hectare.
The reduction in subsidies that this would entail for intensive farming enterprises would be limited at 30 percent.
Explaining the limit, Coveney said the reductions should not be done "to such an extent that they would result in massive losses for productive farmers that have high payments."
He said the average reduction would only be between 11 and 12 percent for farmers who lose out, while farmers who benefit from the reform would get on average an extra 35 percent.
"There will be more gainers than losers," he said.
EU negotiators have also agreed on boosting subsidies for young farmers and obliging member states to allocate 30 percent of subsidies for farms that use eco-friendly farming methods.
But many issues are still outstanding, including sugar quotas and an upper limit on subsidies given out by the CAP.
The European Commission and Parliament want to limit aid received by each farm to at most 300,000 euros ($392,000) and to gradually reduce subsidies above 150,000 euros.
But the Council is reticent to table the proposal, which was already ruled out by a summit of EU leaders this year. Coveney said there was "very little room to manoeuvre" on the issue.
"This issue may have to stay in brackets and be negotiated in the context of ongoing discussions on the European budget," a European source told AFP on condition of anonymity.
French Agriculture Minister Stephane Le Foll warned after the talks: "There is a partial agreement but it is worth nothing without an agreement on everything."
The CAP accounts for around 38 percent of the EU's budget.
CAP reform is due to be implemented gradually starting in 2014 but the new subsidy system would not be in place before 2015 due to delays in negotiations on Europe's next budget.