European legislators debating the future of the Common Agricultural Policy have agreed to a depreciation of CAP payments over the course of the next budget period for large farms, though the rate of decline still needs to be finalised.

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An anonymous EU source told news agency Reuters that progress had been made towards a deal in Monday's sessions.

Negotiators from the EU Parliament, Council and Commission met for the first day of the final stage of CAP reform talks in Luxembourg on Monday. The trilateral negotiations are due to deliver a basic agreement on major CAP reforms by Wednesday, though a number of negotiators and officials have warned this is unlikely, as the talks follow a series of disagreements and delays that have slowed progress of the first reform process in which the European Parliament has taken equal part.   

Ahead of this week's talks, the European Commission said the main aims of reforms are to make the CAP, which accounts for around 40 percent of the entire EU budget, fairer and more environmentally responsible. Current subsidy payments disproportionately benefit large scale producers in North-Western Europe, and the negotiators hope to distribute CAP funds more evenly in the new period.

According to the EU source, single payments will continue to account for around 75 percent of the total CAP fund and mandatory 'greening' measures have gained universal support. This means that 30 percent of CAP payments will be reliant on farmers fulfilling certain environmental conditions. However, some aspects of the conditions, including the amount of land farmers must leave fallow under new rules, remain to be decided.

Although many of the 25 remaining policy disagreements were reportedly ironed out on Monday, resolutions are also still required on key points of contention including a proposed €300,000 subsidy cap for direct payments (opposed by the Parliament) and an end date for sugar beet quotas.

CAP payments to larger farmers will also shrink between 2014 and 2020, when the next period ends. Although initial proposals suggested Europe's largest subsidy claimants could face cuts of up to 40 percent to their payments between 2014 and 2020, a Commission spokesperson said on Tuesday that the decrease in payments is now likely to be 30 percent maximum.

The redistribution has been planned so that each farmer earns at least 60 percent of the national or regional average subsidy payment per hectare by the end of the budget period. The 30 percent limit is intended to ensure larger businesses do not suffer "massive losses" as a result of the restructuring, according to Ireland's agriculture minister Simon Coveney. He assured that more farmers would benefit than would lose out under the new rules.

Even if an agreement is reached during negotiations in Brussels on Wednesday, the new agriculture policy will not come into force in January 2014, as was initially intended. Instead it will be introduced gradually throughout 2014. The CAP package will have to go before the full European Parliament before it is finalised.   

Simon Coveney, who is chairing this week's debates, said he remained "hopeful" that a deal could be struck prior to the negotiations, although he would not commit himself to saying whether such an outcome was likely. Instead, Coveney said "European farmers expect a result this week and we are going to do everything we can to deliver that for them."