Ministers are calling for an increase in food production
The EU has unveiled a plan for reform of its Common Agricultural Policy, the rural payments system that costs more than 40bn euros (£32bn) a year.
The proposals are aimed at making farmers more responsive to market forces amid rapidly rising food prices.
They aim to scrap milk quotas and give farmers incentives to look after the countryside rather than producing food.
EU agriculture boss Mariann Fischer Boel wants to minimise the distortion to food markets the subsidies create.
The draft policy requires approval by all 27 EU member states.
ON THE AGENDA
End to subsidies for major landowners
End to "set-aside" - practice of paying farmers to leave land fallow
Milk quotas to come to an end
Money to be redirected to rural development and green programme
The plan calls for milk quotas to be gradually increased, then scrapped by 2015.
But the biggest change would be to progressively cut subsidies to wealthy farms, and shift the money saved to protect and promote traditional family farms.
For 2009, subsides for farms receiving 99,999 euros would be reduced by 7%, and by 16% for those receiving more than 300,000 euros a year.
The funds would be used by member states to invest in environmentally-friendly programmes, including renewable energy sources and water management.
The amount of land a farmer has to own to be eligible for aid would also rise.
At the moment, that stands at 0.3 hectares, less than the size of a football field.
The Commission says the administrative cost of dealing with the smallest properties is often more than the subsidy itself.
The UK has urged the EU to go much further and get rid of direct payments to farmers altogether.
One French farmer told the BBC the subsidies should stay as a safety net.
"Our prices are very high now so we don't need anything, any safety net," said Langlois Berthelou.
"But when the price will get back down ... we will not have any more efficient tool.
"We don't have to forget that in Europe we have very heavy burden with all the environmental and labour legislation which farmers around the world, in some other parts, don't have."