Luxembourg, June 11 - Europe's farm chief ceded some ground on Monday in her plans for shaking up the EU's vast fruit and vegetable industry, offering to put more cash into the reform to meet the demands of several key producer countries.
The move was an expected opening gambit towards securing agreement among the EU-27 for dramatically changing the way subsidies are given for processing fruit and vegetables, and also scrapping export subsidies. Negotiations begin in earnest on Tuesday and may well run into the night, diplomats say.
In a first compromise offer, EU Agriculture Commissioner Mariann Fischer Boel -- the author of the reform plan -- has targeted areas of strategic interest to Italy, Spain, Nordic countries like Denmark and Sweden. Poland is likely to be next.
"The Commission will have to tweak this around the edges. But the broad outline won't change dramatically," one EU diplomat said.
At it stands, Fischer Boel's plan would decouple subsidies for processing fruit and vegetables: EU jargon for breaking the link between how much a farmer produces and the amount of subsidy that he receives from Brussels.
In future, that cash would be calculated by area based on payments made during a historical reference period for each fruit and vegetable product. Her compromise deal offers a two-year transitional period for phasing out coupled payments -- but crucially, EU countries get leeway during that period to decide which sector payments to decouple and by how much.
The extra flexibility should be welcomed by countries like Spain, keen to cushion its citrus industry, and also France.
When fully decoupled, the payments would be incorporated into the EU's single farm payment scheme (SFP), the streamlined subsidy system agreed under the EU's agriculture reform in 2003.
"The discussion is much more about transition than coupled payments," the diplomat said. "There are a lot of technical issues about the timing and flexibility of the SFP."
The EU is a major player in world horticulture, with wide variations in the types of products grown -- from the cabbages and turnips of northern Europe to the citrus fruits of Greece. The plan also would extend the regime to include culinary herbs.
Its subsidy regime covers dozens of products including nuts, fruits like melons, grapes, pineapples and quinces, and vegetables such as onions, mushrooms, radishes and cucumbers. TOMATO, POTATO OFFERS
Separately, Italy and Spain will get one-off payments of 15 million euros ($20.02 million) apiece, for 2007/08, to support their tomato processing industries during the transition phase.
As a sop to countries like Cyprus, Finland and Italy which grant national aid to their potato industries, those subsidies would be allowed to continue in 2008, instead of being scrapped.
Also in a compromise deal was a pledge to include fruit and vegetable nurseries and orchards into the single payment scheme, a request that had been made previously by Denmark and Sweden.
The next problem for Fischer Boel, diplomats say, will probably be Poland, which is especially concerned about subsidies for its "red fruit" sector. It also wields significant power under the EU's weighted voting system for decision-making.
Poland ranks as the world's third largest producer of blueberries and gooseberries, the fourth for raspberries and sour cherries and sixth for strawberries.
"Poland clearly wants some kind of deal for its red soft fruit, it's worried about imports from China," the diplomat said. "They're looking for some payment per hectare but there isn't much money available for all of this."
At present, annual subsidies for the EU's fruit and vegetables sector amount to about 1.5 billion euros of which about two-thirds goes on production and processing subsidies.
While Fischer Boel's plan would not increase the overall budget, export subsidies would be scrapped. The EU now spends slightly less than 9 percent of the value of fruit and vegetable products on subsidising their export.