The common agricultural policy, better known as the CAP, is a system of subsidies paid to EU farmers. Its main purposes are to guarantee minimum levels of production, so that Europeans have enough food to eat, and to ensure a fair standard of living for those dependent on agriculture.
What is wrong with that?
The policy costs around £30bn a year - or half the EU's £60bn annual budget - and even the agreed reforms do not really reduce the cost. Common attempts to put the finances into some sort of perspective include examples along the lines of it adding £9 onto a family of four's weekly food bill (based on DTI figures), or that the annual income of an EU dairy cow exceeds that of half the world's human population.
Another problem is that the subsidies cause overproduction.
Is overproduction a bad thing?
The EU cannot use all its agricultural products, so it sells them cheaply to the third world. This undercuts local farmers, who cannot compete with the heavily-subsidised imports, and so distorts the market (though the EU is not alone in this, as the US also dumps subsidised agricultural products on developing markets).
The CAP has also been blamed for encouraging environmentally damaging intensive farming. Its commitment to guarantee prices makes it economically worthwhile to use all available land, with the aid of chemicals, to grow more crops than are demanded by consumers.
A policy of "set aside", where farmers are paid to leave land fallow, has attempted to remedy this, but overproduction persists.
Are there any other criticisms of the CAP?
Critics say that the CAP has become badly unbalanced, with 70% of its funds going to only 20% of Europe's farms - predominantly the largest - and leaves nearly three-quarters of EU farmers surviving on less than £5,000 a year. Small farmers account for about 40% of EU farms, but receive only 8% of available subsidies from Brussels. According to British government figures, five UK farms receive more than £1m a year in subsidies.
What has been reformed?
The key change is "decoupling" (as the Euro-jargon has it), or separating payments from production. This means that farmers will still receive money, at a level based on past income, but it will be in the form of a one-off payment that hopefully encourages them to farm for the market, rather than subsidies.
The commission says that the payment will not reward farmers for doing nothing, but will support them in performing the range of roles society demands of them. Decoupled payments will be made where there is "cross-compliance" - when certain conditions (such as statutory animal welfare, environmental and food safety standards) have been met. Farmers could, in effect, be paid to maintain rural landscapes.
Why were reforms being discussed now?
There were two pressures on EU ministers to act. The first of these was EU enlargement and the question of how relatively underdeveloped agrarian economies such as Poland and Slovakia will be brought into the CAP. Hardly anyone believes that the 10 new states can easily join on the same terms as existing members. France persuaded Germany to agree a deal, in October 2002, freezing the CAP budget from 2006 to 2013 (which amounts to a real-terms cut) while subsidies to new members are phased in, which then became EU policy.
The second was September's World Trade Organisation talks at Cancun, Mexico, where the EU is expected to come under fire for its lavish farm subsidies. The commission says that a move to decoupled payments would boost its negotiating position because, unlike subsidies, the new scheme would not distort trade. But the EU has been accused of attempting to divide opposition in the developing world to the CAP in the hope that this will allow it to get minimal reforms through the WTO.
Will the reforms succeed?
The CAP is politically loaded, particularly in France, which has been the biggest beneficiary and is therefore least in favour of changes. Britain contributes more than it receives, and has fought hard for reform.
To push through an agreement, France has been granted a softer timetable. French farmers can keep most of their subsidies until 2007, while other member states will move to "100% decoupling" in 2005.
The environment secretary, Margaret Beckett, summed it up: "It's an excellent agreement. Obviously, in an ideal world, people would like to do more but, given where we started from, we have done immensely well."
She could be thinking back to the October 2002 summit discussing CAP reform at which Jacques Chirac and Tony Blair had a high-profile falling out. The French president told the British prime minister: "You have been very rude, and I have never been spoken to like this before." Mr Blair reportedly told Mr Chirac that the French concern for Africa would sound hollow if it blocked further CAP reform, preventing an effective new round of WTO talks that would open EU markets to developing countries.
Britain, meanwhile, receives a CAP rebate and there have been suggestions - mainly from France - that it should come under review.
Who was for change and who was not?
France led the anti-reform camp, which includes Spain, the Republic of Ireland and possibly Germany, while Britain, Sweden and the Netherlands were demanding change.