Brussels  - European Union member states should allow their farmers to respond to market conditions and stop paying them to produce unwanted goods, the bloc's executive is to recommend Tuesday.

But the proposals, which come in the midst of a bitter debate on soaring food prices, fall short of demands made by some EU member states for the costly Common Agricultural Policy (CAP) to be abolished altogether.

Instead, they are set to focus on modest changes such as ending the policy of paying farmers not to use their land and to produce goods for which there is little demand, and scrapping limits on milk production, EU Agriculture Commissioner Mariann Fischer Boel said.

"Those should be the three main areas where we are quite sure that giving the farmers the real freedom to produce what they want will have a positive effect," she told Deutsche Presse-Agentur dpa.

The CAP has long been the EU's most costly and controversial policy. In its heyday in the 1980s it took up some 60 per cent of the EU's budget, and even after sweeping reforms in 2003 it takes up more than a third, or some 43 billion euros (67 billion dollars) per year.

Critics say that even after the reforms, policies obliging farmers not to use a percentage of their land (the so-called "set-aside") and paying them to produce crops for which there was little demand ("coupling") artificially inflated prices in Europe.

In 2007 EU agriculture ministers proposed suspending the set-aside policy for 2008. The European Commission is now expected to propose making that suspension permanent.

It is also expected to propose simplifying the rules for paying farmers "de-coupled" support - which gives them money without dictating what they should produce - reducing the range of products eligible for "coupled" support, and shifting more agricultural aid money into projects to diversify the rural economy.

However, the proposals, which have to be approved by EU member states, are likely to face a heated debate.

Older EU member states such as France and Germany are opposed to reforms which they see as leaving their farmers vulnerable to market forces, while new states such as Latvia say that the CAP should be reformed to transfer money from richer members to poorer ones. (dpa)