Photo: BMLFUW/AMA-Bioarch...
What is the Common Agricultural Policy
Since the early times of the process towards European integration agricultural policy has been one of most important fields of action of the European policy.
Remembering the food shortage and the hunger suffered after World War II the Common Agricultural Policy (CAP) was laid down in the EEC Treaty as early as in 1957.The objective was to increase agricultural production, to ensure fair incomes in agriculture, to supply consumers sufficiently with reasonably-priced food, and to stabilise markets.
In spite of several essential reforms the CAP is still based on the following three principles:
. Common Market (free transfer of goods in a common market)
. Community preference (EU products are given priority over products from non-EU countries)
. Common funding
Between 1958 and 1968 the Common Market became reality, since 1962 there have been the first market organisations, and since 1968 common agricultural prices. First, the CAP was more or less the instrument of the price policy – the motto being guaranteed prices for the producer without limitations to production. The prices for Community products were then in most cases considerably higher than the world market prices. To be able to offer them at lower prices than imported goods all the same, the prices of imported agricultural products were raised by imposing tariffs or fees. Export grants ensured the competitiveness of European products on the global market.
In the early seventies the demand for most basic foods was already covered by EU products and the growing productivity (larger, but fewer enterprises) resulted increasingly in a costly overproduction. This led to a rise in public storage in the EU and to additional costs incurred through subsidised selling on world markets.
The financial burden which the agricultural sector placed on the EU budget (in 1992 approx. 58%) as well as other problems like the exhausting of soils through intensive management and the pressure exerted by the WTO partners regarding the opening up of the EU agricultural markets have induced a number of reforms in recent years. In addition to income security, the environment, nature conservation, and a holistic view of rural areas have become important issues.
The reforms of the Common Agriculture Policy:
The CAP reform of 1992 (“Mc Sharry Reform”) – This basic reform comprised considerable price reductions for cereals and beef as well as a reduction of the intervention prices in three steps. The income losses suffered by farms as a result of the reform were to a larger extent compensated for by direct income supports (direct payments). Furthermore, to relieve the markets, aids were granted for the set-aside of utilised agricultural areas.
The reformed agricultural policy was also to take better account of the call for a more environmentally friendly agriculture. This reform reduced overproduction, thereby securing farmers’ incomes.
The 1999 CAP Reform (Agenda 2000) – This reform reflected the transformation of the European agricultural policy of the years to come. The negotiations on a further liberalisation of the global agricultural markets launched in the year 2000 and the upcoming enlargement of the European Union were the greatest challenges for the CAP. The Agenda 2000 deepened the 1992 reform by further replacing price supports by direct payments and making rural development the second pillar of the Common Agricultural Policy. Rural development comprises for example the modernisation of farms, quality assurance for foods and the creation of alternative employment opportunities in rural areas.
The latest big reform was eventually undertaken in June 2003 and April 2004.
link Europe page: Common Agricultural Policy
04.05.2010, Lebensministerium III/1