Italy has indicated it will back the EU's long-stalled trade agreement with South America after the European Commission pledged to make €45bn in agricultural funding more readily available to farmers, removing a key obstacle to signing the pact.

Francesco Lollobrigida, Italy's agriculture minister, said on January 7 that Rome would support the accord if assurances on farm financing were confirmed at a meeting of EU agriculture ministers in Brussels. "If these conditions are confirmed by the Commission at today's meeting, Italy will support the agreement," he said.

The shift from Rome is a win for European Commission president Ursula von der Leyen, who has been seeking to finalise the deal after Italy and France blocked her planned trip to Brazil in December to sign it, demanding additional protections for their farmers.

Von der Leyen has proposed allowing member states to access the full €293.7bn allocated to the Common Agricultural Policy immediately when the next seven-year EU budget begins in 2028, rather than waiting for a mid-term review in 2032. The change would make €45bn available to farmers across the bloc at the start of the budget cycle.

The commission president also offered to relax rules governing rural development funds, enabling countries to allocate resources more directly to farmers without requiring broader projects covering connectivity, employment and environmental sustainability.

For Italy, these changes would make approximately €10bn easier to access over the seven-year period, though this represents a reallocation of existing funds rather than additional money, according to Italian newspaper Il Post.

The concessions appear designed to win over Italy and France, which used their political weight to block the agreement's signing last month. Both countries faced pressure from powerful farming constituencies worried about competition from cheaper South American beef, poultry and sugar imports.

Bloomberg reported that the deal could be finalised at a meeting of member states' ambassadors on January 9, with von der Leyen travelling to Paraguay on January 12 to sign the accord during that country's rotating presidency of Mercosur.

However, France has not yet budged. Annie Genevard, French agriculture minister, said this week: "This is not the end of the story... I intend to raise awareness among members of the European Parliament and others. As long as the battle is not over, it is not lost."

Poland and Hungary have also expressed opposition to the pact.

The commission needs support from at least 15 EU member states representing 65% of the bloc's population to authorise signing. The agreement would then require approval from the European Parliament.

Ireland, a major beef producer that had previously expressed concerns, suggested on January 7 it might back the deal. Prime Minister Micheál Martin said Dublin was working with other countries to reach the signing stage, adding: "We are concerned about Mercosur, but it must be said that a lot of progress has been made in the last 12 months."

At the January 7 meeting in Brussels, EU agriculture, trade and health commissioners were expected to offer assurances to national ministers about future CAP funding and a review of import controls, including maximum permitted levels of pesticide residues.

Lollobrigida also submitted a letter to European agriculture commissioner Christophe Hansen requesting that the EU's carbon border adjustment mechanism not apply to fertiliser purchases, arguing this would ease price pressures on European farmers.

The trade pact, which has been under negotiation for 25 years, would create one of the world's largest free trade zones between the EU and Argentina, Brazil, Paraguay and Uruguay. Brussels views the agreement as crucial for securing new export markets and access to critical minerals as it faces potential fresh US tariffs under Donald Trump's administration.

The deal still requires ratification by the European Parliament, where opposition has been building across political groups concerned about the impact on European agriculture and food safety standards.