Agriculture & Rural Development
The Common Agricultural Policy (CAP) is one of the most
important and expensive European policies.
The basic goals, which remain unchanged since the 1960s are to promote
improved productivity in the sector and ensure a stable food supply.
These are pursued whilst balancing the consumer interest in reasonable
prices with the farming interest in maintaining and improving incomes.
EU agricultural policy has particular sensitivity because agriculture
is seen across the EU as much more than a branch of the economy – it is seen as
the lifeblood of rural society.
The CAP has been funded from what is known as the European
Agricultural Guidance and Guarantee Fund. Traditionally, the vast bulk of
resources were devoted to guaranteeing a price for farm produce by intervening
in the market. This approach resulted in the EU budget paying to take
agricultural produce off the market and into storage.
In recent years other mechanisms have included capping production
through quotas (e.g. in the milk sector) or by "setting aside" land
as well as increased use of direct income support to farmers. Resources have
also been devoted to agricultural development and diversification under
Structural Funds. Further reform was seen as essential – not just to modernise
the CAP which already serves agriculture from northern Finland to Southern
Portugal but also to prepare for enlargement of the EU to include the countries
of Central & Eastern Europe.
Even after recent reforms, the CAP still takes up over 40% of EU expenditure. Consumers complained that the
system of ensuring farm income by guaranteeing a price per product has meant
prices have been kept unnecessarily high. On the other hand, the proportion of
EU GDP devoted to agriculture is not untypical of what many national
governments have chosen to spend on agriculture in the past. Countries outside
the EU (including neighbours like Switzerland and Norway, Japan and the US)
still spend a comparable proportion.
The CAP has traditionally assumed that helping farmers is the best way
to help rural communities. It has had limited success in reversing the trend of
rural depopulation and doubts have been expressed about whether large subsidies
for big, productive farms have really benefited communities in rural areas. So
policy has shifted towards a better balance between supporting farmers and
developing the rural community as a whole.
The CAP has been criticised as failing to take environmental factors
sufficiently into account, for example, by encouraging intensive farming.
Food safety and animal welfare
There has been an increasing demand for the CAP to play a part in
promoting high standards of food safety and animal welfare, especially after
the BSE crisis.
CAP rules imposing duties on agricultural imports and subsidising
exports have long been attacked as unfair by countries outside Europe. They are
now limited by international rules under the World Trade Organisation
(WTO) and further trade liberalisation for agriculture is one likely result of the
next round of WTO negotiations. This will have to embrace not only farm
support, but the relationship between agriculture, trade and environment;
consumer safety and animal welfare; and labeling/consumer information.
As part of the Agenda 2000 package, EU leaders agreed reforms to the CAP for the
period 2000-2006 based on the following policy objective:
- increase competitiveness in domestic and external markets, to ensure that European farmers
can take full advantage of expanding world markets,
- enhance the safety and quality of products
to meet consumers´ demands,
- ensure a fair standard of living
for the agricultural community and contribute to the stability of farm incomes,
- integrate environmental goals into the CAP,
- promote a sustainable agriculture,
- enhance the creation of alternative
job and income opportunities for farmers,
- simplify CAP legislation to make
it more transparent and accessible.
Enlargement and CAP reform
The enlargement of the EU to Central and Eastern Europe will bring a
number of heavily agricultural and relatively poor economies into the EU. The
CAP has to be adaptable enough to incorporate these countries without
de-stabilising agriculture either in the existing EU 15, or in the new Members.
- Competitiveness: Ensuring farm incomes by guaranteeing prices meant
EU farm products were relatively expensive. Price cuts have been agreed to
improve competitiveness by stimulating the internal market and helping EU
agricultural products which compete in global markets.
- These include a 15% price cut for cereals, a 30% price
cut for beef and veal, and a 15% price cut for butter and skimmed milk. Cuts on this scale represent
a substantial benefit to the consumer. This will benefit shoppers, the
processing industries, and many farmers.
- Rural development and the environment: The reforms seek to bring
rural development and the environment into the heart of the CAP. A unified
strategy should embrace agricultural support, help to rural communities and
countryside stewardship. This means new resources and more coordination.
Problems like the impact of intensive beef farming are tackled by tripling
support for extensive farms. New milk quotas are reserved for young farmers to
counter depopulation. Compliance with nationally-set environmental rules will
be a condition for support.
- Decentralisation: Member States have been given a new autonomy to
influence the application of the CAP within their frontiers. For example, they
will have the power to set conditions to the payment of direct aids, such as
environmental requirements, limits on intensive farming, or employment levels.
When farms fail to meet such conditions and direct aids are not paid, Member
States will keep the funds to pay for their own agro-environmental programmes.
They will also be given a new role in deciding where direct support in the beef
and dairy industry should go.
- Simplification: Over the years, a wide range of different support
schemes have been established, each with its own rules and procedures. These
can be difficult for farmers and administrators alike. These have been cut back
and rationalised, reducing both the time spent on management and the scope for