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“But that does not mean the CAP is obsolete.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 was dismissive of 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.

“Free market mayhem 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 in the WTO, “unless there is something meaningful and positive on the table in return”.

But New Zealand agriculture minister Jim Anderton insisted that the EU had to make further concessions if the Doha Development Round was to deliver on its objectives.

“New Zealand recognises the substantial commitment that the EU has made towards the elimination of export subsidies,” he said.

“Likewise, the CAP reforms have been very significant.

But New Zealand is looking to the EU to improve its offer on market access.

Removing the excess protection without impacting at all on actual trade is just not good enough.”

Mr Mandelson indicated that he would only extend the EU’s offer if the USA reined in its excessive domestic and export supports, and if Australia, Canada and New Zealand reformed their export monopolies.