BRUSSELS (AFP)--European agriculture ministers kept holding marathon farm subsidy reform talks Thursday after failing to reach a deal overnight.
The French E.U. presidency was set to present to ministers its second compromise paper - drawn up in collaboration with the European Commission - after a first version presented Wednesday evening was rejected by several delegations, notably the Germans, diplomats said.
The most contentious point in the bid to reform the bloc's controversial Common Agricultural Policy is the gradual lifting of milk quotas in coming years, with the quotas set to disappear entirely by 2015.
Germany has been insisting on special funding to support milk producers in difficult regions such as mountainous areas, where the producers are less able to handle the lifting of the quota system.
Germany, along with Austria and others, fears that a resultant drop in prices as the quota caps are lifted would jeopardize the future of farmers in mountainous regions.
Their operations are less competitive and less flexible than their counterparts on Europe's grassy plains.
At the other extreme, some E.U. nations would prefer to see the quotas scrapped immediately, rather than progressively over several years.
France's initial compromise package sought to overcome Rome's misgivings by offering Italian farmers a 5% quota increase next year, while its E.U. counterparts would introduce a mere 1% rise.
This plan didn't go over well with Austria in particular, according to one diplomat.
Another major sticking point was the commission's wish to cut direct subsidies linked to farm production, and to increase funding to projects to protect the environment and foster rural development.
Brussels, which has already cut 5% of its direct aid to farmers, wants to raise this to 13% by 2013.
France, which will hold the European Union's rotating presidency until the end of the year, in turn proposed a figure of 11%, but some nations still thought this too radical a cut.
The final compromise offer could be around 9% or 10%, according to sources close to the talks.