EU delays decision on reforming banana subsidy system

The European Commission has pulled back from proposing changes to the rules for EU aid to banana producers that are aimed at decoupling subsidies from prices, a spokesman said Monday.

"We will continue the talks within the commission," said EU agriculture spokesman Michael Mann, without giving details.

The European executive had been set to present its proposals for reform on Wednesday. No new date has been fixed, said Mann.

As with other EU agricultural reforms, the planned changes would cut the link between subsidies and production levels, notably scrapping compensation for market price fluctuations, a European source said earlier.

The EU's executive arm believes that the change will give producers a more stable income, which will help them to adapt to market changes. It is also in line with EU agricultural reforms in other sectors, the source said.

The commission also hopes to stabilise the costs to the community's budget and to set up a system more in line with its commitments in international trade negotiations, the source added.

EU payouts to banana producers amounted to some 240 million euros (305 million dollars), with half going to France.

The islands of Martinique and Guadeloupe (France), the Canaries (Spain), as well as Madeira and the Azores (Portugal) account for most of the EU's banana production, but the total accounts for just 16 percent of the bloc's consumption, according to commission figures.

The commission hopes to introduce the reforms next year but the measure could be the subject of months of negotiation before the 25 members states agree on it.