Some of the proposals it questioned include a new tier of environmental conditions, with penalties for farm businesses that do not comply or fail to meet new criteria for 'active' farmers, farm size and number of employees.
EFRA committee chairman Anne McIntosh MP said: "Farmers are seeing their incomes fall while hard-pressed families have to swallow rising food prices. Neither the EU nor DEFRA have faced up to these twin challenges."
Efra said that – although Defra believes direct payments should be phased out - direct payments have a place within the CAP, at least until 2020, and for as long as business conditions in agriculture fail to deliver a thriving and profitable industry.
It added that ministers need to set out exactly how UK farmers will become self-supporting against a backdrop of rising fuel, fertiliser and feed prices - and in the face of greater competition from third countries that do not operate to EU standards of environmental protection or animal welfare.
The MPs also urgeed the Coalition Government to clarify its food security strategy, taking into account the recommendations of the Foresight Food and Farming Futures report and its position on CAP reform.NFU President Peter Kendall described Efra’s report as "an accurate assessment of the shortfalls within the European Commission’s plans for reforming the Common Agricultural Policy."
He said: "Ministers need to work towards steering agriculture on a path towards greater market orientation. None of the farmers I have talked to want to rely on public support; they would much prefer to get their return from the market but British farmers continue to face barriers: dysfunctional supply chains, both here and in the EU, and unfair competition from imports produced to lower standards are just two. These are the issues which politicians should address and soon."