Chapter 9

March 12, 2024 7:35 PM

Common Agricultural Policy (CAP)

- Expensive, politically sensitive and complex

- Covers 9 goals such as fair income, increase competitiveness
○ to ensure fair income,
○ to increase competitiveness,
○ to rebalance power in the food chain,
○ to promote climate change action,
○ to ensure environmental care,
○ to preserve landscapes and biodiversity,
○ to support generational renewal,
○ to create vibrant rural areas,
○ to protect food and health quality

- Keep agricultural prices high and stable by market intervention

- Pay landowners to farm in ways that benefit European goals;
environment, quality, welfare

Old Logic = price supports through price floors, and a food tax and
subsidy

Farms are very different and the size of the farm effects the distribution
of benefits.

Most gains from price floors go to large farmers who are already rich
- Pay for good behaviour

The cap did help farmers providing stable prices, growth and more food
and lower dependence on food imports

Green revolution: after the war, higher prices saw more investment and
higher output. Much more than actual consumption

The price floor cannot be maintained with a tariff, the EU has to

purchase the surplus food

The EU started dumping food which drove down world food prices
And the CAP did not bring in great rewards and uneven payments for
farmers made them upset

‘Industrialization of farming’ had a negative environmental

impact:
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impact:
• pollution;
• water quality;
• animal welfare and ‘factory farming’:
• ‘mad cow’ disease;
• ‘foot and mouth’ disease;
• consequence: Lisbon Treaty includes animal protections.
• Concerns for developing countries

- Political power of farms makes it infeasible to eliminate price floors

- Farmers already investsed heavily
- Small farmers earned less but without the CAP they wouldn't be
farming altogether
- EU citizens also supported the CAP

New EU logic:
(1) support prices lowered to the world price level;
(2) farmers compensated for the lower prices with ‘decoupled direct
payments’, and;
(3) a new linking of the payments to social concerns, particularly the
environment, animal welfare, and rural development

Today‘s CAP
• more equal allocation across member states and across farmers within
each member state
• tying of the direct payments to environmental goals.

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