Elaine Watson Food industry executives have broadly welcomed Franz Fischler's proposals to break the historic link between food production and subsidies in a radical overhaul of the Common Agricultural Policy. However, there are concerns that the money UK farmers will lose in production subsidies will not filter back to this country in equal measure, spelling bad news for the long-term future of the supply base. Farming and Food Commission chairman Sir Don Curry said the proposals were broadly in line with the Policy Commission's recommendations, in that market forces rather than subsidies should dictate what farmers produce. However, the proposal to cut direct payments to farmers by 3% a year until 2010 will hit British farmers hard, said Curry, because there was no guarantee that the modulated funds will come back to the UK. "I will be seeking reassurance that the funds retained by the EU are reallocated fairly," he said. Proposals to reduce intervention payments ­ whereby the EU buys a product if its market price falls below a certain level ­ will not go down well with arable farmers already seeing grain prices at 30-year lows, he added. The Food and Drink Federation said manufacturers like to put factories as near to their suppliers as possible, making a dynamic and profitable farming industry essential in maintaining a UK manufacturing base. Deputy director general Martin Paterson said: "These proposals are a very positive step in the right direction towards a more market-oriented CAP encouraging an efficient and viable supply base for UK food and drink manufacturers." The NFU said it supported the principles underpinning Fischler's proposals, but reiterated its "fundamental opposition" to dynamic modulation. While boosts in subsidies to US farmers make Fischler's task more difficult, there will be pressure on all sides for a deal. l See opinion, page 16 {{NEWS }}