Ringfenced EU funding for farming would be cut by more than a fifth, while the Common Agricultural Policy (CAP) fund would be merged together with rural financial supports, under proposals from the European Commission for the bloc's next budget.
The commission has presented its plans to MEPs in Brussels, which would see a 22% reduction in guaranteed EU agriculture funding.
Currently around €387 billion of the EU's €1.2 trillion budget is ringfenced for CAP but this would fall to around €300bn.
This could result in certain funding previously allocated for agriculture being funnelled into other areas, with the CAP fund merged with rural financial supports into a single National and Regional Partnerships fund.
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The commission argues the change would allow for "stronger synergies between policies", and create a more flexible, crisis-responsive budget that better reflects the EU's shared priorities.
The commission outlined its CAP proposals as part of its overall EU budget plans - known as the Multiannual Financial Framework (MFF) - which comes into effect from the start of the next budgetary cycle in 2028.
Around 120,000 Irish farmers receive roughly €2bn annually in CAP payments to help support the rural economy and food production.
The commissions's proposal also suggests member states would have more power to reallocate funding "based on their specific needs rather than uniform allocations".
It also recommends CAP funding "should be focused on active farmers", meaning supports would be "targeted towards farmers who exercise agriculture as a principal activity".
This would mean that farmers who are of pension age would no longer receive supports under CAP.
In addition, the proposals would increase supports for younger farmers significantly, with funding for the costs of establishing a new farm potentially rising from €100,000 to €300,000.
Fine Gael MEP Maria Walsh, who is a full member of the European Parliament's Agriculture Committee, said merging CAP into a single fund brings huge risk to Irish farmers.
"This new approach could reduce ringfenced funding, change the income payments system and ultimately harm our farmers and the development of rural Ireland," she said.
She added that "while the relevance of some pillar two tools - from farm advisory services to LEADER programmes - is maintained in the proposal, the funding is uncertain.
"Without guaranteed investment, our rural communities and farmers will undoubtedly suffer," she said.
"The effects of this will range from reduced income payments for farmers to less investment in infrastructure across rural Ireland, in particular in the midlands and west of the country."
Independent Ireland MEP Ciaran Mullooly said he is "alarmed and concerned" by the proposals "to scrap a fund with millions of euros of Pillar 2 rural development grants.
"These grants provide a lifeline to many parts of the midlands, west, north west and north east," he said.
He added that "the commissioner is proceeding against the advice of all farmers and community groups with a single fund to be merged with cohesion funds paid to member states.
"The scale of cuts in the budget being proposed are absolutely disastrous for Irish farmers."
Read more: What do proposed CAP changes mean for Irish farmers?
EU Commission has to be faced down - IFA
The Irish Farmers' Association (IFA) has said the scale of the proposed cut to the CAP budget will have significant and negative ramifications for Irish agriculture and the rural economy.
IFA President Francie Gorman said: "The only definitive figure for farming supports is 20% lower than the current budget.
"This would be a hammer blow for the sector if it were to go ahead.
"Both the EU Council and the EU Parliament have to step up here and face down the EU Commission. This move would imperil food security if allowed through."
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He added that "44% of the €2bn envelope that is allocated to Ireland comes via rural development and farm schemes.
"If this is not ringfenced, there is no guarantee that it will make its way to farmers. And this move comes when the commission is proposing a much larger overall budget," he added.
Speaking on RTÉ's Six One, Mr Gorman said CAP is hugely important to rural Ireland.
He said: "Everybody wants a successor coming home to farm, everyone wants to see the farm that they grew up on being farmed by somebody.
"But to be clear, if you want the next generation of farmers coming home, along with all the measures that we bring in to support young farmers, we still have to have viable farms for them to come into."
Meanwhile, the ICMSA - the group representing dairy farmers - said that the reforms are actually just a "speeded-up timetable for the EU's withdrawal of direct supports to farming and primary food production".
ICMSA President Denis Drennan said: "The only absolute certainty arising out of today's announcements is that high standard and sustainable food production within the EU will fall and food prices across the EU will rise as farmers will have to seek more from the marketplace to replace the reduced supports."
'Beginning of a protracted process'
Minister for Agriculture Martin Heydon has said that the commission's budget proposals are "just the beginning of a protracted process".
The minister said: "Member States will, through the Council of Ministers, begin the process of agreeing a general approach to the commission's proposals, before engaging in line-by-line negotiations with the EU Parliament and the EU Commission.
"This will take some time, and I fully expect the progression of these proposals to be a significant feature of Ireland's Presidency of the EU Council in the second half of next year.
"My priority throughout will be to ensure that the legislation finally agreed reflects Ireland's concerns, and provides certainty and stability for farmers," the minister added.
Once the commission sets out its proposed EU budget, this will start a process of debate and negotiation that will ultimately lead to a final vote on the next budget for the bloc, that would begin in 2028.
Ireland is expected to play an important role in this process, especially regarding CAP funding, given that we will hold the rolling six-month EU presidency for the second half of 2026.
