Common Agricultural Policy: Evolution and Future Challenges

Common Agricultural Policy: Evolution and Objectives

The Common Agricultural Policy (CAP), established in 1962, governs land issues in the European Union (EU).

Core Objectives of the CAP

Its objectives are to ensure a fair standard of living for farmers, stabilize markets, avoid price changes, and ensure supplies to consumers at reasonable prices.

Mechanisms for Market Stability

The mechanisms adopted to achieve these objectives are:

• In the market, there are Common Market Organizations (CMO) for the most representative agricultural products. For each product, maximum and minimum prices are set.
• The governing foreign market principles include community preferences for agricultural products and tariffs to avoid competition from cheaper third countries.
• Granting support to farmers to improve and modernize their farms.

Results of the Initial CAP

The results of the first CAP were an enormous increase in Community agricultural prices, a large accumulation of surpluses, and increased environmental degradation.

CAP Reforms: 1992 and 1999

This situation forced the implementation of various CAP reforms (1992 and 1999). Their aim is to achieve rural development and environmental protection to create sustainable agriculture. The mechanisms for this are as follows:

• The decrease of the minimum prices of agricultural products to make them more competitive in the international market.
• The reduction of surpluses through early retirement, contributions to surplus products, extensification of production (encouraging fallow and forestry), shifting production to new products, destination of surplus energy to outlets or new industrial uses, and limited support for viable farms in the most backward areas.
• The arrest of environmental degradation by encouraging organic farming, forestry, and reforestation.
• Increased funds for rural development to stem the depopulation of these areas and conserve natural and cultural heritage.

Future Challenges for European Agriculture

The future challenges facing the CAP are:

• The increasing globalization and market liberalization conflict with the protectionism that the CAP assumes and international pressures originating in favor of a freer market, particularly from the U.S.
• The EU enlargement to countries with significant weight in agrarian population and GDP, but with low productivity and a need for restructuring.