Significant progress has been made on Common Agricultural Policy reform, with provisional agreement reached on the way the single farm payment will be distributed, a key issue for Irish farmers.

Speaking on his way into the second day of talks in Luxembourg, Minister for Agriculture Simon Coveney said provisional agreement had been reached in talks with the European Parliament last night on the issue of a minimum payment for farmers.

Under the proposal countries could introduce a minimum payment of 60 per cent of the average single farm payment by 2019.

While this compares to a 75 per cent threshold originally proposed by the European Commission, farming groups had hoped the number would have been even lower.

Final agreement is expected to be reached tomorrow.

“We think this is a good middle ground position, and I would strongly defend it,” Mr Coveney said this morning.

He said under the new proposal Irish farmers who stand to lose money because of the reforms would see a cut of between 11 and 12 per cent in their direct payment income, while the deal would deliver a 35 per cent gain to farmers who have traditionally received a lower EU payment, bringing them brought up to the minimum threshold.

The new CAP is proposing a radical change to the way EU’s single farm payment is distributed because it now calculates payments on a per hectare basis, rather than linking it to past productivity.

In addition, the European Commission believes that all farmers throughout the European Union should be entitled to a minimum level of payment from the EU direct payments system.

Irish farming groups have been lobbying strongly for a low mandatory minimum payment. They believe a high minimum payment could reward unproductive farmers and affect payments for those who have traditionally received higher payments because of higher productivity.

Broad agreement was also reached last night on the inclusion of a mandatory young farmer scheme, which will see up to 2 per cent of direct payments used to support youth farming.

“We want to positively discriminate in favour of young farmers to promote generational change in farming, to change the fact that only 6 per cent of farmers in the European Union are under 35,” Mr Coveney said this morning.

“That’s no basis for an innovative modern industry to expand and grow.”

The reform of the Single Direct Payment system – under which Ireland receives about €1.25 billion a year – is one of the most contentious issues in the current reform of the CAP, which is undergoing its biggest shake-up in a decade.

Negotiations have been ongoing for three years but it has fallen to the Irish presidency of the Council of the European Union - which is now in its final week - to secure final agreement on the reform package.

While the commission launched its proposals in 2011, the council of agriculture ministers, under the Irish presidency, and the European Parliament, reached agreement on their respective positions in March.

Since April 11th, negotiations have been onoing between the European Parliament and Irish officials representing the Council, in a bid to secure agreement.

The Common Agricultural Policy accounts for some 40 per cent of the EU’s annual budget.