This will be the first EU farm policy reform shaped by Parliament as a full co-legislator with member states.

"Today we have struck a proper balance between food security and improved environmental protection, so that the new EU farm policy can deliver even more public goods to EU citizens. But it also must be made less bureaucratic and fairer to farmers, not least to empower them to cope with crises. This will be our position when negotiating its final shape with member states," said agriculture committee chair Paolo De Castro, an Italian member of the S&D group, after the vote.

Fairer and Transparent Funding for Working Farmers

Differences among EU member states in the levels of EU funding for farmers should be reduced slightly faster than the European Commission proposed.

No member state's farmers should receive less than 65 per cent of the EU average.

Parliament also voted in favour of publishing the names of beneficiaries of EU agricultural funding and inserted a list of land-owners, such as airports and sports clubs, which should be automatically excluded from this funding unless they prove that farming contributes a substantial share of their income. Member states could extend this list.

More Money for Young and Small Farmers

Young farmers should get a 25% top-up payments for a maximum of 100 ha and member states could also use more money to support small farmers.

Parliament backed Commission plans to cap direct payments to any one farm at €300,000, and substantially reduce payments to those receiving more than €150,000.

However, this would not apply to cooperatives which redistribute payments to their members.

More Flexible Greening

MEPs agree that 30 per cent of national budgets for direct payments should be made conditional upon compliance with mandatory greening measures, but stress that these measures must be made more flexible and gradual.

The three key measures - crop diversification, maintaining permanent pasture and grassland and creating "ecologically-focused areas" - would remain but with certain exceptions, e.g. to reflect the size of the farm.

To help farmers cope with market volatility and strengthen their price bargaining position, their organisations should be given new tools and allowed to negotiate input and delivery contracts, say MEPs. These rules "must not translate into cartels, but strong producer organisations should allow farmers to break free from economic dependence and guarantee them a decent standard of living", said rapporteur for the common markets organisation regulation Michel Dantin, a French member of the EPP group.

"This decision reflects the voice of European citizens on how the future EU farm policy should look. We need to ensure that we keep and promote rural economies and that competitiveness and protection of environment are compatible. This is how we can best use public money to deliver public goods for everyone," said rapporteur for the direct payments and rural development regulations Luis Manuel Capoulas Santos, a Portuguese member of the S&D group.

Milk, Sugar and Wine

To ensure that the expiry of milk quotas does not lead to a serious crisis in the milk sector, MEPs suggest granting aid for at least three months to milk producers who voluntarily cut their production by at least five per cent. Amendments calling for prolongation of milk quotas, set to expire in 2015, were rejected by the House.

By contrast, Parliament vetoed plans to allow sugar quotas to expire in 2015, so as to enable beet producers to prepare for the liberalisation of the sector in 2020. Vine planting rights should also be prolonged until at least 2030.

MEPs stress the need to cut red tape and ensure that penalties for breaching rules are proportionate. "We need to cut the time farmers spend on paperwork. Member states could now create an aid application that would remain valid for several years so that farmers do not have to register their claim each year but only when there are changes," said Giovanni La Via, an Italian member of the EPP group who is the rapporteur for the financing, management and monitoring regulation.

The final shape of the new EU farm policy will be decided by the European Parliament, EU farm ministers and the European Commission, in three-way negotiations which should begin in late March/early April.

Labour MEPs Critical

However, the EU Parliament's stance has draw some severe criticism.

Following votes, UK Labour MEP Brian Simpson welcomed the greater transparency on agriculture spending but said he would have liked to see much more radical reform overall.

The CAP accounts for nearly 40 per cent of the EU budget and MEPs voted to determine how these funds should be spent in the period from 2014 to 2020.

In the run up to the vote, Labour worked with MEPs from across Europe to put forward ambitious environmental proposals, with a better deal for UK farmers and rural communities in Britain.

Mr Simpson said: "Farming is a vital industry in the UK and the EU as whole, so Labour MEPs want to see an agricultural policy that is environmentally friendly, sustainable for rural communities and fully fit for the future.

"I'm delighted that we have been able to achieve reforms in some key areas, including on the controversial issues of transparency.

"We believe that there should be full disclosure on how CAP money is being spent, so we proposed that information on the beneficiaries of European agriculture funds should be published and we are delighted that the majority of MEPs supported our stance.

"However, we're extremely disappointed that other crucial reforms were rejected by MEPs in favour of sticking with the status quo."

Labour called for a greater focus on rural development and an end to unfair, inefficient spending. Labour MEPs also highlighted a crucial need for Europe's agriculture policy to be greener, so proposed stronger environmental protection requirements that farmers must meet in order to qualify for funding.

Mr Simpson added: "We wanted to see reforms that would improve the competitiveness of rural areas, protect biodiversity and ensure that the CAP gives farmers the support they need whilst benefiting society at large.

"Unfortunately these reforms were rejected by the Parliament, leaving us no option but to vote against the current CAP proposals as they stand."

EU negotiations on the Common Agricultural Policy will continue in the coming months, with MEPs expected to vote on updated proposals from the European Commission in June or July.

Mr Simpson concluded: "A competitive and productive agricultural sector is more important than ever and Labour will keep pushing for the radical reforms that will deliver real public benefit.

"Our priority is making sure that agriculture practices in Europe are green and sustainable, to protect the environment and guarantee the future of Europe's food production."

Farmers'Issues Heard

The UK National Farmers' Union Deputy President Meurig Raymond, who has been meeting MEPs in Strasbourg this week, said that MEPs had listened to many issues raised by the NFU.

"First I think it is right to give credit to the MEPs who we have been working with since October 2011 when the Commission published what we described as a ‘dog’s breakfast’ of CAP reform proposals.

“MEPs have listened to many of our concerns and have made meaningful changes that, if approved in the final deal, will strip out up some of the unnecessary bureaucracy from the future CAP.

“We have impressed on MEPs the importance of devising a CAP which creates the right conditions for farmers to produce high quality food for a growing population.

“We are somewhat relieved, therefore, to see the Commission’s ludicrous proposal to set-aside seven per cent of land for ‘Ecological Focus Areas’ slashed to three per cent by MEPs and that farm level restrictions on ploughing of permanent grassland will not be brought in, in the first instance.

“However an extremely disappointing element of today’s vote was that not enough MEPs were able to support the good work farmers are already doing on farms.

“MEPs failed to support any of the amendments which would have derogated many of our grassland farmers, and all of our farmers who are already undertaking agri-environment commitments, from having to do further greening requirements.

“And this is despite the European Commission itself agreeing at last year’s NFU Conference that the existing efforts of farmers should be recognised. I don’t know if this was really the intention of the majority of MEPs but I will certainly look to the Council of Ministers and Commission to reinstate that recognition through the trilogue process.”

MEPs also supported extending coupled aid to a maximum of 15 per cent of the member state envelope.

“It is essential, when competing on a single market, that distortions between farmers are kept to a minimum,” added Mr Raymond.

“We are deeply disappointed, therefore, that MEPs have taken a step back in time by supporting increased amounts of coupled support which will lead to market distortions and reduces the industry’s market orientation.

“I am also very concerned with measures in the dairy sector that would result in increased market management once the dairy quotas end in 2015. The industry has worked for many years on the basis that milk quotas would end and the sector would be free to respond to market demands.

“Introducing a measure, which would penalise farmers who had increased production while granting an aid to those who had cut production, is a retrograde step.

“I would like to thank MEPs for approving new measures to ease the burden of inspections and bring in more proportionate fines for minor offences. Too often farmers are fined substantial sums of money for mistakes beyond their control. However it is deeply disappointing that MEPs voted to reinstate many of the cross compliance requirements that MEPs on the Agriculture Committee had previously voted to remove, particularly the hugely burdensome and controversial sheep EID regulations.”

Yesterday’s vote now provides the European Parliament with a formal mandate to go into negotiations with the Council of Agriculture Ministers – which includes Defra Secretary of State Owen Paterson and his 26 EU counterparts.

Vote Results

The draft mandate for negotiations with member states on the future direct payments rules was approved by 427 votes to 224, with 32 abstentions.

The draft mandate for negotiations with member states on the future rural development rules was approved by 556 votes to 95, with 18 abstentions.

The draft mandate for negotiations with member states on future common market organisation was approved by 375 votes to 277, with 24 abstentions.

The draft mandate for negotiations with member states on financing, management and monitoring rules was approved by 474 votes to 172, with 23 abstentions.