The European Union's executive commission has unveiled an agricultural reform plan for the 27-member block that aims to overhaul farm funding to better meet current challenges - including global warming and the recent spike in world food prices. Lisa Bryant has more on the proposals from Paris.

Farm workers harvest cauliflower plants in a field near the western German town of Bornheim, 24 Sept 2007

The plan by the European Commission aims to fundamentally change how agricultural subsidies are handed out - and to give farmers more flexibility on what crops and how much they can grow.

In presenting what she called the "health check" in Strasbourg, France, Tuesday, European agricultural commissioner Mariann Fischer Boel said it aims to modernize and streamline agriculture in the 27-member European Union and give farmers greater freedom.

"When we started preparing our health check we were in a completely different time, but recently we have seen prices going up, we have seen new challenges coming up -- energy, climate change," she said. "So I think we are very timely with our new proposal that meets exactly the new requirements of the public."

Among other proposals, the EU plan would reduce subsidies for larger European farms in favor of underwriting smaller rural development projects. It would also move away from traditional subsidies and production quotas - and eventually scrap a practice of making farmers set aside 10 percent of their land due to overproduction.

In order to pass, the plan needs the approval of all EU member nations along with the European Parliament. On Monday, EU agriculture ministers meeting in Brussels agreed Europe needs to increase its food production, but that does not mean the new reforms will be adopted.

A number of agricultural ministers oppose dismantling the current system of EU farm subsidies and regulation, which particularly favors countries with large agricultural sectors, such as Germany and France.

The proposals coincide with a new study by the European Commission looking into reasons for the recent world food price rises. Among other factors, the report blamed high energy costs, increasing demand for biofuels, slowing growth in cereal yields and poor harvests in key countries producing and exporting cereals for the price increases.