European institutions on Wednesday agreed to reform the Common Agricultural Policy to favour small farms over big business and promote environmentally friendly farming in an overhaul of the EU's most costly programme.
The Irish presidency of the European Union announced on its Twitter account it had reached an agreement between member states and the European Parliament and the European Commission.
The deal is to be confirmed by Parliament committee later on Wednesday.
The CAP accounts for about 38 percent of the EU's budget.
CAP reform is due to be implemented starting in 2014 but the new subsidy system would not be in place before 2015 due to delays in negotiations on Europe's next budget.
Under the current rules, 80 percent of CAP payments go to the top 20 percent of intensive farm businesses since several countries still link the subsidies to production levels.
Details of Wednesday's agreement have not been disclosed,but under a previous draft member states would have to ensure that by 2019 each farmer receive at least 60 percent of the average national or regional subsidy per hectare.
The reduction in subsidies that this would entail for big farms would be limited at most to 30-percent.
EU negotiators had also agreed on boosting subsidies for young farmers and obliging member states to allocate 30 percent of subsidies for farms that use eco-friendly farming methods.