Minister for Agriculture Charlie McConalogue has said difficult discussions lie ahead in the ongoing effort to reach agreement between the European institutions on the future Common Agriculture Policy.

He was speaking after European Union negotiators failed to agree reforms to the bloc's huge farming subsidy programme, with talks due to resume in June on rules to protect small farms and curb agriculture's environmental impact.

The EU is nearing the end of a three-year struggle to reform its Common Agricultural Policy (CAP).

Minister McConalogue said: "I am very disappointed that a CAP deal was not achieved this week as, along with my colleagues in the Council of Ministers, I worked incredibly hard to do so.

"The last few days have been very challenging. For its part, the Council has shown a willingness to negotiate and to seek a compromise that will allow the new CAP framework to be finalised.

"Our farmers need this, and time is running short if we are to have it in place by January 2023 – the alternative does not bear thinking about."

He said it was "clear" that the two sides remain some distance apart on a range of issues.

These include conditionality requirements, the targeting of support (including mandatory redistribution of direct payments), the ring-fencing and expenditure of eco-scheme funding, and the social dimension.

"The road ahead is difficult but we all must get there," the minister concluded.

The CAP will account for roughly one-third of the EU's 2021-2027 budget - €387 billion - on payments to farmers and support for rural development, with the new rules kicking in from 2023.

The revamp aims to curb the environmental impact of agriculture.

This is the most frequently reported source of pressure on Europe's habitats and species and is responsible for 10% of EU greenhouse gas emissions.

After all-night talks yesterday, EU member states failed to find a compromise to put forward in negotiations with the European Parliament and the European Commission.

"Ultimately, although progress was made in several areas, a number of key issues remained outstanding," EU member states said in a statement today.

EU agriculture commissioner Janusz Wojciechowski said negotiators came "very close" to a deal.

EU agriculture commissioner Janusz Wojciechowski

MEPs from the European Parliament criticised member states for adding small print at the last minute to weaken the rules.

One of the main points of dispute is how much to spend on "eco-schemes" to protect the environment, such as organic farming or re-wetting peatlands to absorb CO2.

EU member states had proposed a requirement for countries to spend an annual average of 18% of payments for farmers on such schemes, or lose the money. Parliament had sought a binding 30% share.

Other outstanding issues include how to divert cash from big land owners and businesses to smaller farms.

The European Parliament wanted countries to redistribute 12% of payments for farmers to smaller farms.

Member states offered a 10% compromise, but said states can dodge this if they prove they will use other methods to distribute the funds fairly.

"When we looked at the small print, the council (of representatives of EU member states) had... basically inserted text that made it voluntary," said Peter Jahr, one of those leading the talks.

Campaigners have said the proposals fail to align farming with EU climate ambitions, and would allow the majority of funds to be spent on polluting forms of industrial farming.

Other rules under discussion would set standards for working conditions and form a crisis fund in case agricultural markets are disrupted by an emergency such as a pandemic.