Move to slash food mountains

Reforms designed to end the scandal of Europe's food mountains and wine lakes are being unveiled today.

To the fury of the French, the European Commission is proposing huge cuts in EU subsidies which encourage overproduction.

Tony Blair is backing the landmark plan along with the Germans and Spanish. The Prime Minister has repeatedly warned that the outdated Common Agriculture Policy, which costs £27 billion a year, is stopping the EU from expanding to Eastern Europe and threatening its finances with bankruptcy.

However, French President Jacques Chirac is almost certain to wield his veto to scupper the long-awaited reforms when Europe's leaders debate them later this year.

Today's proposals are the biggest shake up in Europe's costly and controversial farming policy for 50 years.

Under present rules EU taxpayers pay farmers subsidies for every tonne of farm produce - from grain and beef, to olives, milk and wine - providing a huge incentive for inflating production beyond what customers are prepared to buy.

Surpluses cost taxpayers almost half the entire annual EU budget and force up prices in the shops. Each year millions of tonnes of butter, meat and other products are given away to reduce stockpiles.

The new system would break the link between production levels and cash rewards, paying farmers instead to improve quality and safeguard the rural environment.

The French would be among the biggest losers because their farmers receive the highest subsidies under the old arrangement. The powerful farming unions are certain to force Mr Chirac to veto or severely water down the reforms.

Margaret Beckett, the Environment and Rural Affairs Secretary, said the EU had to stop paying farmers for produce that was not wanted but she added: "One thing we will have to try to avoid is creating a system which is just as daft as what we have now but does it in a different way."

Labour's agriculture spokesman in the European Parliament, Gordon Adam, said: "We must break the idea that CAP spending belongs to farmers. Farmers do not have a birthright to a pot of gold called the Common Agriculture Policy."

He said the CAP benefited only five per cent of Europe's population.

Among notorious loopholes in the system is that farmers can be paid millions of pounds to produce nothing at all. Special subsidies for keeping land barren were introduced to reduce overproduction.

The system has also been riddled with fraud. EU studies show that subsidies were claimed for crops which did not exist. One farmer claimed for growing cereals in an area whose map coordinates were for an area in the middle of the North Sea.