CAP

Campus Kulmbach Faculty VII for Life Sciences: Chair of Food Law
Food, Nutrition and Health 09.11.2022 Kulmbach
Today’s Lecture

• Historical Development
• CAP
• CAP Reform 2023-27

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History of CAP
• 1950’s main concern in Europe was to increase and ensure food supply
• Agriculture had major economic role
• Vision to establish a single market, including agriculture
• Signing of Treaty of Rome in 1957, entry into force on 1st January 1958 and through it
establishment of common agricultural policy
• Objectives were specified
• Policy proposal by Commission is implemented during the 1960’s
• Price support as backbone

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Historical Critique
 Price support as single support measure was criticised early on
 negative externalities, the policy would create distortionary costs and negative spill over effects
both within the community and outside for international community
 Theoretically price support and structural policies would have been a better combination to
grow healthy agricultural practices
• Signing countries were restless to assure peace and stability and did not want to overly discuss
complex agricultural policy designs
• The policy had to fit the current economic institutions in Europe in the 1950’s

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Timeline
1962
• Introduction of CAP

1970
• Mansholt Plan

1980
• Overproduction

1992
• MacSharry Reform

1999
• Rural Development

2013
• First Reform under Ord. Leg Procedure

2021
• Green Reform
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Objectives of CAP – Art 38 TFEU

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Objectives of CAP – Art 39 TFEU

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Objectives of CAP – Art 40 TFEU

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Common Agricultural Policy
• Divided into two main pillars
• First Pillar: direct payments and market measures
• Second Pillar: Rural development schemes

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First Pillar of CAP – CMO’s
• Common Market Organization (CMO) are part of the first pillar
• Established to meet objectives set out in Art. 40 to support market schemes, especially
for market stabilisation, fair living standards and increase in agricultural productivity
• 21 CMOs were united into a single CMO in 2007
• Policies became more market-oriented and intervention tools are used as safety
precautions during crisis

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First Pillar of CAP – Direct Payments
• Period from 2014-2020, with an extension to 31st December 2022 due to incompletion
of CAP reform by 1st Jan 2021
• Based on Regulation (EU) No 1307/2013
• Entirely paid for by European Union

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First Pillar of CAP – Key Elements
Compulsory components, mandatory for MS:
1. Basic payment scheme or Single area payment scheme
2. Greening Scheme
3. Young farmers scheme
4. Active farmers
5. Cross-compliance
6. Budgetary and financial discipline mechanism
7. Integrated Administration and Control System

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First Pillar of CAP – Key Elements
Voluntary Components:
1. Schemes for the redistribution of basic payments
2. Coupled payments
3. Areas with natural constraints/less favoured areas
4. Small farmers scheme

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Second Pillar of CAP
• Objective to support development of rural areas in EU, co-financed by EU funds and
national and regional funds
• More flexible, permits MS national authorities to design individual programmes
Three main priorities:
1. Encourage agricultural competitiveness
2. Assure sustainable management of natural resources and climate action
3. Attain balanced territorial development of rural economies and communities,
including the creation and maintenance of employment

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Financing
• Originally financed by single fund, through the European Agricultural Guidance and
Guarantee Fund (EAGGF)
• Replaced by European Agricultural Guarantee Fund (EAGF) and the European
Agricultural Fund for Rural Development (EAFRD) in 2007
1. Guarantee Section: mainly finances direct payments in full, first pillar
2. Guidance Section: finances operations regarding structural policies and rural
development, co-financed, second pillar

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EU CAP Budget
• 33.1% of total EU Budget for CAP in 2021
• CAP Pillar 1: 76.8% for direct payments and market measures
• 94% are direct payments to farmers
• CAP Pillar 2: 23.2% for measures for rural development

• Budget for period 2021-2027 is 31% of total EU Budget

• CAP budget has been declining over the past decades ( 66% in 1980’s vs. 31% now)
• Largest payment recipients in 2021 were France (17.33%) Spain (12.4%) Germany
(11.2%) and Italy (10.4%)

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CAP Reform 2023-2027
Goals of the new CAP are:
• contribute more to EU environmental and climate goals
• more targeted support to smaller farms
• allow greater flexibility for member states in adapting measures to local conditions
• New CAP will entry into force on 1st January 2023

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Useful links
https://eur-lex.europa.eu/EN/legal-content/summary/treaty-on-the-functioning-of-the-euro
pean-union.html

https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=LEGISSUM:03010103_1

https://agriculture.ec.europa.eu/common-agricultural-policy/cap-overview/new-cap-2023-
27/key-reforms-new-cap_en

https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A02013R1307-20220101

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