In order to face new challenges, such as food security and environmental protection, create new jobs and provide renewable energy, farmers should have a reasonable incentive which means that the EU agriculture budget must remain unchanged. The Agriculture Committee is seeking to influence the upcoming legislation on the reform and modernisation of the EU farming sector, a process which is running in parallel with discussions on the EU's multiannual budget.

By providing secure supplies of high quality food, while contributing to environmental protection and renewable energy, MEPs believe the EU's agriculture policy will gain fresh legitimacy in the eyes of Europe's citizens. It must be adequately funded to meet its new challenges and to give farmers an incentive to use modern, environmentally friendly techniques.

The Agriculture Committee agreed that direct payments to farmers should be more directly linked to "greening measures" (low carbon emissions, capture of GHG emissions, low energy consumption). MEPs also welcomed the introduction of a ceiling on direct payments per farmer, as is being suggested by the Commission, and proposed that the size, the employment record and the degree of environmental protection of each farm should be taken into full account. An EU wide "incentivisation" system, 100% financed by the EU, should be set up to support farmers who go in for sustainable production methods and sound management of resources such as water, soil and energy.

Fighting speculation in agricultural commodities is crucial, to reduce extreme price volatility and guarantee greater stability for farmers inside and outside the EU. To avoid misuse of public money, MEPs also propose that direct payments be reserved for "active farmers", i.e. those who use land for production. It presses the Commission to provide a clear definition of an "active farmer", which it says should certainly exclude cases where the administrative costs of making a payment are higher than the payment itself. Moreover, MEPs believe new legislation is needed to improve producer organisations' bargaining power in the food supply chain, with greater price transparency and less unfair commercial practices, and to stop the trend of falling incomes for farmers.

The vote in plenary will take place in June. The Commission will unveil its draft legislative package in the autumn, after which Parliament will have full co-decision powers with the Council on the final content of the legislation. This report is a response to a Commission consultation paper.