Brussels is planning to ringfence hundreds of billions of euros of direct subsidies to farmers despite efforts to redirect its budget towards other objectives, such as boosting Europe’s defence and economic competitiveness.

The European Commission plans to merge several funding streams into a single envelope per country in its multiannual budget due in mid-July, giving capitals more leeway on how to spend the money. But most agricultural subsidies will be handed over in a separate, protected package, according to three officials with knowledge of the plans.

Under pressure from the EU’s powerful farming lobby, the commission has acknowledged that many small farms would go under if they lost the direct income support paid under the EU’s Common Agricultural Policy (CAP), the officials said.