Further change in the way the EU supports its agriculture is inevitable, but exposing the industry to total free trade is not an option.

Addressing the NFU’s annual conference, EU trade commissioner Peter Mandelson said he agreed that the EU could not continue to spend 40% of its budget on agriculture.

“This does not make sense at a time when our economic future depends on higher education, research and development, faster innovation and a modern social policy,” he said.

“But that does not mean the CAP is obsolete. Agriculture is a sector that cannot be treated like all others. It is too intimately connected to wider issues such as the environment, food security and the future of the countryside.

“Reform must continue. But it must take account of broader societal and non-economic interests. And it must be paced to allow adjustment at a speed people can cope with.”

Mr Mandelson also poured scorn on those who suggested that the CAP was the only thing standing in the way of “making poverty history”.

“I am not going to be swayed by a lazy political correctness into giving ground in agriculture simply because this will please a vociferous lobby that has misunderstood what is really needed to tackle world poverty,” he said.

“Trade justice cannot be equated with agricultural liberalisation and a race to the bottom for EU agriculture, and a free market mayhem that would gravely damage the interests of some of the poorest countries in the world.”

But Mr Mandelson did make clear that the EU’s latest offer to the WTO, including the elimination of export subsidies and cuts to import tariffs, would involve some pain for farmers.

“European agriculture – dairy, cereals, poultry, beef – will contract and there will be a significant loss of revenue and employment,” he said. The EU would not therefore go any further with its offer, “unless there is something meaningful and positive on the table in return”.

Mr Mandelson was convinced, however, that farmers would gain from a successful trade Round. “If we can cement our 2003 CAP reform in multilateral agreements, it offers farming more security and stability – legally and financially – for years ahead.

“In addition, farmers stand to benefit from lower barriers to trade in the rest of the world. Why? Because our exports to the rest of the world are high quality, high value added products.”