* EU governments agree negotiating mandate in reform talks
* Ministers back main reform lines, but weaken details
* Talks to finalise the reform due to begin next month
* EU lawmakers aim to complete discussions by June
By Charlie Dunmore
BRUSSELS, March 20 (Reuters) - The European Union is on course to complete reforming its 55-billion-euro-a-year farm policy from the start of 2014, after EU governments agreed a joint negotiating position late on Tuesday.
Farm ministers from the 27 EU member states backed the main lines of the reform of the common agricultural policy (CAP) first proposed by the European Commission in 2011, although they weakened the changes in several areas.
The agreement provides government negotiators with a mandate for talks with the Commission and European Parliament to finalise the reform, which are due to begin next month with the aim of reaching final agreement in June.
"We should rightly acknowledge our achievement today. But we should also acknowledge that it is only an interim success," said Simon Coveney, farm minister of Ireland, which currently holds the rotating presidency of the European Union.
"We need to move on quickly from here and build on the momentum of the last week, which has also seen the European Parliament finalise its position on the CAP reform package," he said in a statement.
Agreement was only reached after various concessions were made to individual governments to weaken elements of the reform.
These included allowing countries not to apply a proposed cap on annual subsidies to individual farmers of 300,000 euros. The Commission and parliament both say it should be mandatory.
Ministers also voted to delay the abolition of national sugar production quotas and minimum sugar beet prices until 2017 - two years after the deadline of 2015 proposed by the Commission, but sooner than the 2020 favoured by the parliament.
Britain's farm minister Owen Paterson said some countries had wanted to keep the quota system until the end of the decade, but that London and other capitals had opposed the move.
"Sugar beet quotas are bad for business and bad for consumers. They are driving up the wholesale price of sugar by 35 percent and adding one percent to hard pressed families' food bills," he said in a statement.
Governments deleted a plan to move to flat-rate, per-hectare subsidies by 2019 to reduce inequality in payments to farmers.
In major beneficiary countries such as France, Italy and Spain, the most productive farms currently receive far more EU cash than the rest, thanks to a link between subsidies and 2000-2002 production levels.
Moving to a flat-rate system could see the subsidies paid to Europe's biggest grain and livestock farmers cut by up to 40 percent, EU officials have said.
Rather than ending the link between subsidies and production levels - blamed for creating the EU grain mountains of the 1970s and 1980s - governments agreed to increase the level of "coupled" payments in certain areas to 12 percent of total direct subsidies.
"This is a significant change, since the European trend until recently has been to cut coupled subsidies in a bid to end them altogether," French farm minister Stephane Le Foll, who was among the ministers pushing for the change, said in a statement.
Ministers backed the Commission's plan to make 30 percent of future direct subsidies conditional on farmers meeting new environmental criteria, and agreed to financial penalties for those producers that fail to comply.
But they watered-down the environmental steps that farmers must take - such as crop diversification and leaving land fallow - and agreed that producers could be paid twice, under both the direct aid and rural development programmes for the same steps.
EU farm lobby Copa-Cogeca praised the compromise, saying it would help ensure that farmland would not be taken out of production unnecessarily. But environmental groups panned the agreement.
"At a time when austerity prevails throughout Europe, it is extraordinary that the Council seems to have no shame in endorsing paying farmers twice for the same measure," said Faustine Defossez of the European Environment Bureau.
"Continuing down this path will surely spell the end of public support for funding European agriculture." (Additional reporting by Nigel Hunt in London and Sybille De La Hamaide in Paris; editing by Keiron Henderson)