The Common Agricultural Policy (CAP) explained
The Treaty of Rome provided for the establishment of a common agricultural policy (CAP) which would have as its objectives
- to increase agricultural productivity by promoting technical progress and by ensuring the rational development of agricultural production and the optimum utilisation of the factors of production, in particular labour;
- thus to ensure a fair standard of living for the agricultural community, in particular by increasing the individual earnings of persons engaged in agriculture;
- to stabilise markets;
- to assure the availability of supplies;
- to ensure that supplies reach consumers at reasonable prices.
The CAP has been based on the three principles of
- a single market
- Community preference
- common financing
CAP financing comes from the European Agricultural Guidance and Guarantee Fund, (EAGGF or FEOGA) which is an integral part of the EU Budget. The Guidance Section of the EAGGF provides part-financing for measures of structural improvement and the Guarantee Section provides 100% financing for market supports and direct payments as well as part-financing for certain rural development measures e.g. agri-environment improvements.
CAP reform
When established, the CAP relied, in the main, on prices above world market prices to secure stable supplies of food at a time of insufficiency. Over subsequent years, this approach, together with technological breakthroughs, gave rise to surpluses in many products. The cost of these surpluses, the external trading environment, concerns about food safety and animal welfare and a growing awareness of environmental issues led to successive reforms. In the 1980s the reforms were targeted at specific sectors. Subsequent reforms were more broadly based.
Under the MacSharry reform in 1992, there was a significant shift from market support to direct payments to farmers and some environmental measures were introduced.
In November 1997 the Agriculture Council of Ministers defined the European model of agriculture as having a multi-functional role including maintaining the countryside, conserving nature, contributing to the vitality of rural life, responding to consumer concerns and demands regarding food quality and safety, protecting the environment and safeguarding animal welfare. This model was endorsed by the European Council in December 1997.
The second reform - Agenda 2000 Agreement, which was finalised by the European Council in March 1999 - was based on the European model of agriculture and marked a further significant shift from market supports to direct payments. It also intensified the emphasis on food safety and the environment. Additionally, the budget for agriculture was fixed for the years 2000 to 2006. In 2002, the European Council decided on the limits to be applied to agricultural expenditure for the EU of fifteen plus the ten Acceding Countries in the period 2007 to 2013.
In 2002, the Mid Term Review of Agenda 2000 commenced. It concluded in June 2003 with a fundamental reform which provided for the decoupling of direct payments from production in the case of livestock production, milk production and arable crops, with partial decoupling options for Member States which did not wish to decouple fully. Direct payments (coupled or decoupled) were made conditional on compliance by farmers with a range of food safety, environmental and animal welfare measures.
Food safety
The new emphasis on food safety is reflected in the establishment of a Commissioner for Health and Consumer Protection and the publication in January 2000 of the Commission's White Paper on Food Safety. As proposed in the White Paper, a European Food Safety Authority has been established and a comprehensive programme of legislative reform is being pursued, covering all elements of food safety including veterinary and plant health rules, food and feed hygiene and animal welfare.
Rural development
The Agenda 2000 reform established rural development as the second pillar of the CAP, the objective being to improve the economic and social situation of all rural areas. All structural measures are now combined into a single programming framework. The rural development programmes include investment in farm holdings, setting up young farmers, training, early retirement, compensatory payments in less favoured areas and areas of environmental sensitivity, other agri-environment measures, afforestation, support for meeting demanding standards (environment, public, animal and plant health, animal welfare and occupational safety) and measures to promote food quality.
The future
The CAP will continue to play an important part in the economic and social life of the EU but it now faces further challenges including:
- The integration of the agriculture sectors of the ten new Member States which will accede to the Union on 1 May 2004;
- The negotiations on agriculture in the current WTO round;
- The implementation of the Mid Term Review and the transition to a more market orientated agriculture which in itself represents a significant challenge to Member States;
- Proposals for further reform in the olive oil, cotton, tobacco, sugar, fruit and vegetables and hops sectors.
