Critics say subsidies lead to mountains of unneeded food

The European Commission is putting forward proposals to stop paying farmers according to how much food they produce.

But the plans are likely to meet resistance from France and Spain, the main beneficiaries of the current system.

EU farm commissioner Franz Fischler said it was "decision time" and warned against "lame compromises" which could lead to more red tape and overproduction at taxpayers' expense.

"The negotiations will be tough and we have a few days' and nights' hard work ahead of us. But an agreement can be reached," he said.

Possible compromise

The Common Agricultural Policy (CAP) takes up nearly half of all EU spending and is blamed for encouraging massive overproduction - creating notorious "food mountains" and exports at subsidised prices.

The European Commission wants to abolish the subsidies, and replace them with a single payment which would reduce over time, leaving farmers to make decisions according to what consumers want, rather than how much subsidy they could earn.

BBC environment correspondent Tim Hirsch says there is great pressure to reach agreement this week ahead of world trade talks in Mexico in September where farm subsidies will be a major issue.

Under the proposed plan, the money saved from scrapping subsidies would be used to help boost rural development and environmental protection.

Diplomats say France has hinted in recent weeks that it might accept a compromise that would mean keeping some of the subsidies.