By Sheila Barter BBC News Online

The Common Agricultural Policy (CAP), which gobbles its way through 40 billion euros a year - almost half the EU's budget - could finally be set for wholesale reform.

The policy has long been seen by critics as European Union meddling at its worst. Beset by claims of fraud, the CAP is also blamed for helping to keep the developing world poor by subsidising European farmers.

The CAP also famously adds its own lakes and mountains to the European landscape, with the vast quantities of produce grown for the sole purpose of destruction.

We have to bring agriculture into line with what consumers and taxpayers are demanding

Gregor Kreuzhuber Commission spokesman

But reformers trying to mount assaults on the CAP fortress have repeatedly been driven back by the combined forces of farmers' fury and governments protecting their own interests.

That may be about to change.

Leaked proposals from Agriculture Commissioner Franz Fischler suggest he may be about to drag the CAP - kicking and screaming if necessary - into the 21st century.

Changing landscapes

The suggestions are not just tinkering at the margins, but a sea change - a "whole shift in philosophy" as one insider put it.

The message of our citizens is unequivocal - they are ready to support our farmers under the condition that they get environment, food, safety and quality or animal welfare in exchange

Franz Fischler Commissioner

Instead of simply encouraging farmers to produce unwanted crops, Brussels is believed to want major new factors in the equation - competition, rural development, quality, food safety, value for money, quality.

According to an opinion poll carried out by the commission, this is what many Europeans want too.

Post-war Europe had only one need in mind - boosting agricultural production. Now Brussels believes other things matter more.

"We have to bring agriculture into line with what consumers and taxpayers are demanding," Gregor Kreuzhuber, spokesman for Mr Fischler told BBC News Online.

"They do not want milk lakes and food mountains - they want a sustainable farming sector with quality and food safety.

"This is something we have to achieve by changing the way we support farmers, to get better value for money, more freedom for farmers and a more market-orientated approach."

The carrot-and-stick approach would be key under the reported proposals, which have been sent to other commissioners for discussion on 10 July, and could come into force as early as 2004.

Farmers would be given flat-rate subsidies, instead of payments based on farm size or production.

The levels of subsidy would be shrunk by 20% over the next few years, freeing up extra cash to be ploughed into what the commission labels "rural development" projects.

Using fewer pesticides, investing in new capital projects, reforestation, marketing schemes or even early retirement could all be eligible for cash boosts under the proposals, it is believed.

And controversially, no individual farm would be able to claim more than 300,000 euros (�200,000) a year in subsidies.

Biggest losers

The idea of capping subsidies is likely to prove particularly contentious in the UK, which has many of Europe's largest farms. Some currently earn around �2m a year in European subsidies. France and eastern Germany are also home to larger farms which could be among the biggest losers.

Mr Fischler believes his farmyard revolution can take place within existing budgets.

Promises of greater transparency and less red tape could be used to try to sell the ideas to farmers, who are likely to react with horror to the ideas.

But Mr Fischler may have calculated wisely.

Fischler's not stupid. He must have done this for a reason. He may have even struck deals with European leaders already

Analyst

The changes could be seen as elevating Brussels onto the moral high ground in its spats with the United States - which is actually boosting its farm subsidies - and the World Trade Organisation.

It could also ease pressure on European budgets as the EU expands eastwards into poor farming countries like Poland.

The new policy could be seen as more "Third-World-friendly", supporters say, forcing European farmers into a more competitive environment.

And insiders say Mr Fischler is not a man to rashly put forward proposals without some chance of success.

"He's not stupid. He must have done this for a reason. He may have even struck deals with European leaders already," one analyst told BBC News Online.

But the proposals may sink in the same Euro-mire as others before it.

Opponents line up

France, home to Europe's most vociferous farming lobby, and led by the newly re-elected President Chirac, is expected to remain firmly against the changes.

Ireland, Greece and Belgium - all net beneficiaries of the CAP in its current form - can almost be counted on for opposition.

Pro-reform countries could be expected to include the UK, Sweden, Denmark and Germany.

But Germany could switch sides if right-wing challenger Edmund Stoiber wins September's elections.

Italian right-wing Prime Minister Silvio Berlusconi has already taken his country into an uncertain position on CAP reform, joining Spain and Portugal as EU countries whose position is also hard to read.

Mr Fischler has got a tough job. There will be a lot of opposition, and I think it will be difficult, but it shows he is aiming high

Jack Thurston UK expert

All in all, analysts believe Mr Fischler has his work cut out for him.

"I doubt whether he can get these proposals through in their current form," said Jack Thurston, a former special adviser to UK Agricultural Minister Nick Brown, and now a CAP specialist at the Foreign Policy Centre think-tank.

"Mr Fischler has got a tough job. There will be a lot of opposition, and I think it will be difficult, but it shows he is aiming high.

"There has been a lot of pessimism for several months about the prospects for reform, but this has cheered everyone up."

Those cheered up do not, of course, include most of Europe's farmers, whose self-image as mistreated, unthanked, besieged guardians of the landscape is likely to be reinforced by the proposals.

Tinkering

And the timing could be as controversial as the proposals themselves.

The commission's 2004 target date is puzzling, say insiders, given that the proposals have been issued under the guise of a "mid-term review" of the CAP, when only tinkering at the edges was expected.

The Brussels-based Committee of Agricultural Organisations will not comment on the leaked proposals, but is known to be angry that a routine mid-term review is being hijacked into a radical platform for change.

But Mr Fischler appears to be taking on the farmers in a way and time of his choosing.

The CAP is seen by its supporters as a vital guardian of European landscapes and cultures, by its opponents as a dinosaur.

No-one is arguing for its extinction - not yet at least - but the meteorite of change could well be heading its way.