Common Agricultural policy

The common Agricultural policy ( CAP ) is a Politique installation on the scale of the European Union, based mainly to measures of Maintenance the prices and Subvention nement, aiming to modernize and develop the Agriculture. It concerns the Head office “Agriculture and rural development” of the European commission.

The CAP also applies to the products of the fishing like to the products of first transformation.

Origins and evolution of the CAP

Productivism and protectionism

The the Treaty of Rome, signed the March 25th 1957 by the founding members of the EEC, gave to the CAP an orientation resolutely productivist, because it was necessary to increase the protectionist agricultural production, and , because the construction of a Customs union required a protection at the borders. It was then a question of making the Community self-sufficing, more interdependent and still of modernizing an agricultural sector very disparate according to the countries.

The CAP was one of the bases of European construction. It was an undeniable success under certain aspects: modernization of agriculture, development of the production, immense productivity gains which made to Union the 2nd world exporter, food self-sufficiency, but it met frightening shelves with crises related on the overproduction of many products, the variations of exchange of the Monnaie S, on the entry of novel members, the opposition with other exporters within the framework of GATT then of OMC and to the explosion of the costs supported by the community budget, and mainly by the Germany.

Context of the creation of the CAP

There existed already in the six countries founders of the European Community, of the national agricultural policies, not coordinated. That is explained by the nature of the agricultural production which cannot be left completely subjected to free plan of the market. There are indeed too many risks, related to multiple factors: climatic risks, multiplicity of the speakers, times between decision making and effects on the market, difficulty of storage of certain products… , which affects the production as well as consumption. That results in very important fluctuations of the levels of production, and consequently of the sometimes unbearable price changes, as well by the producers as by the consumers.

The Treaty of Rome instituted also the principle of Free movement of the goods, which was by definition incompatible with support measures of the market at the national level, because that would have distorted the normal play of the Concurrence.

The six countries founders did not ensure, to differing degree, their self-sufficiency (policy-holder with 80% only on average) for the majority of the large food products, and thus depended on a very unstable worldwide market.

The level of development of the agriculture, which represented at the time 22% of the active population of the Community, was very unequal and the need for a modernization of the agricultural structures appeared obvious.

Bases of the CAP

The Treaty of Rome defines the bases of the CAP in its title II which treats Agriculture and in particular, in its article 33 (previously, article 38), assigns five precise objectives to him:

  • to increase the Productivity Agriculture by developing technological advance and by ensuring an optimal use of the factors of production, in particular of labor;
  • to ensure a equitable Standard of living the farming population, in particular by the raising of the individual income of those which work in agriculture; transport
  • to stabilize the Gone S;
  • to guarantee the Safety of the provisioning;
  • to ensure of the reasonable prices the Consuming S.

Article 34 (previously, article 39) of the Treaty laid down the installation of a Common organization of the market agricultural, being able to take three forms:

  • of the common rules as regards competition;
  • an obligatory coordination of the various national organizations of market;
  • a European organization of the market.

The Conference of Stressed which was taken place of the 3 with the July 11th 1958 (not to be confused with the Conférence of Stressed of April 14th, 1935), defined the great principles of the CAP:

  • the unicity of the market , corollary of free movement of the goods, which will suffer from the monetary variations before the arrival of the Euro;
  • the community preference , which at low prices protects the European market from the imports and the fluctuations of the worldwide market (this point crystallized the opposition of the large exporters: the United States, Canada, Australia and, even after its entry in the Community, of the Great Britain which was supplied preferentially in the the Commonwealth);
  • financial solidarity , the expenditure imposed by the CAP being dealt with by the community budget;
  • of the minimum price guaranteed for the producers.

Chronology of the successive reforms

Successive reforms were undertaken, not without evil because of the difficulty of finding a consensus (in fat two major revisions of the CAP):
  • 1971: following the Mansholt plan, installation of a policy of improvement of the agricultural structures;
  • 1984: resorption of the surpluses, with the installation of production quotas, in particular in the dairy field, and a policy of reduction of the support prices;
  • 1988: installation of a budgetary discipline to frame the expenditure, with the fixing of an annual maximum envelope of expenditure, and the freezing of the grounds (improperly compared with the agronomic Fallow);
  • 1992 : reorientation of the policy of support, the guaranteed prices approach the level of world rates; first orientation towards an environmental policy with the introduction of agri-environmental measurements in co-financing with the Member States; stocks regress;
  • 1999: support for the rural development and fixing of a financial framework for the period 2000 - 2006; this reform is intended to prepare the arrival of 10 novel members and to make the CAP compatible with the rules of OMC;
  • 2003 : Luxembourg agreement carried out by the European Commissioner, Franz Fischler. To put itself in conformity with the regulations of OMC, the new CAP introduces the Découplage (i.e. the farmer is not obliged any more to produce to touch a help) assistances and ratifies the progressive reduction in the export refunds. It also introduces the concept of conditionality, uncoupled helps are versed in the condition which the farmer observes the agricultural and environmental good conditions as well as the good animal being.
  • 2008 : a “checkup” of the CAP is envisaged by the police chief European with agriculture, Mariann Fischer Boel, in order to evaluate the policies in place and to anticipate the evolutions by 2013 (end of the guaranteed current financing). A first inventory of fixtures published at the end of November 2007 suggests making more agriculture European competitive and respectful of the environment, passing inter alia by a fall of the subsidies related to the production and a greater development assistance rural. Philippe Chalmin pleads him for a total liberalization of the market of cereals.

Mechanisms

Types of intervention

The CAP intervenes in various manners in the agricultural economic exchanges:
  • by the means of direct subsidies to the exploitations (ex: Cereals)
  • by the means of tariff barriers and export refunds (ex: bovine meat)
  • by the means of production ceiling (quotas) (ex: dairy Quota in Europe, freezing of the grounds)
  • by the means of assistances to marketing (ex: Butter, distillation of the products of the vine)
  • by the means of assistances to the promotion of the products (ex: Fruits)
  • by the means of assistances to the investment in agribusiness industries (" measurement; g" rural development)

Each common organization of market uses, according to the products, of the mechanisms specific to the dies.

More generally, the European commission defines, by the means of the CAP, the regulation framework in whom agricultural food products can be produced or introduced in Europe.

Organization

  • the Common organization of the markets (OCM);
  • financing, ensured by the Funds European of orientation and agricultural guarantee (EAGGF), which was organized in two sections in 1964:
    • the section “orientations”, which helps with the structural agricultural reforms; this section belongs to the Structural bases. The budget allocated with this shutter of the CAP was of 4,3 billion euros in 2003, used for the modernization of agriculture, the installation of young farmers, rural development, etc;
    • the “guaranteed” section, by far most important, is used to finance the related spending with the common organization of the market. In 2003,39,4 billion euros were devoted to this shutter (direct aids, support of the markets, storage, etc). Since 1988, the annual rhythm of increase in this expenditure should not exceed 74% of the annual evolution of the Community GNP.
  • the CAP has four types of own resources: the agricultural rights (levies co-responsability in the event of going beyond of the ceilings of production) constitute 2% of the resources, the customs duties (taking away with the imports) (15%), the VAT (38%), and the GNP of the national countries (43%)

Two “pillars”

The European Council of Berlin of the March 24th and 25th 1999 decided to supplement the dimension of the bearing CAP on the support of the markets and the farm prices (the “1st pillar” of the CAP) by one “2nd pillar” devoted to the Rural development, and centered on:

  • improvement of the competitiveness of agriculture and its multifonctionnality;
  • the promotion of the Protection of the environment in agriculture as well as forest measurements contributing to the Sustainable development;
  • the participation in the development of the rural territories.

Principal products being the subject of an common organization of the market

These products, listed in appendix I with the Treaty, covered in the beginning only half of the agricultural production. This list was very wide thereafter.
  • Complete listing

Financing

Cost of the CAP

The CAP accounts for approximately 40% of the expenditure in the European budget (but this one is relatively weak compared to the budgets of the Member States; the resources of the European Union are indeed made up of a taking away of 1% of the VAT and of a reached a maximum contribution with 1,03% of the Community GNP).

In 2002, the cost Net of the CAP rose to 45,36 billion euros, that is to say 46,1% of the total budget of the European Union (to 15). The total expenditure rose to 47,26 billion (including 44,25 under the EAGGF-guarantee and 2,95 under the EAGGF-Orientation) and the receipts with 1,89 billion (including 1,21 under the taking away). However the CAP remains one of the only European common policies.

The European Union is not the only one to support its agricultural production. As comparison here the level of the assistances of some important countries, compared according to various criteria (source OECD):

May 17th, 2006, the European authorities signed the agreement on the budgetary framework 2007-2013. 43% of the global envelope will be devoted to the heading " conservation and management of the natural resources " , which includes the CAP. The latter will be equipped with 362,855 billion euros (42% of the total) including 81% for direct aids and 19% for the development Rural.

Strong disparities

The unequal distribution of the compensatory assistances distributed to the title of the CAP makes the object of criticism recurring. This situation is more and more openly criticized with the center even of the agricultural profession.

The European Union is based on the principle of transparency to encourage the Member States to make public of the data which prove extremely sensitive but the majority national authorities and agricultural organizations tend to refuse the diffusion of this information. Certaines ONG, as Oxfam also conducted campaigns with an aim of a greater transparency revealing, for example, that the prince Albert of Monaco or the Queen of England respectively received subsidies of more than 250.000 and 500.000€.

In 2004, the French ministry of Agriculture revealed for the first time certain data concerning the principal recipients of the subsidies of the CAP on a total of 9,5 M€ allotted to France, first beneficiary country in volume

  • being field crops, the ten larger recipients touch on the whole 6 M€ (the largest check, which is established with an amount of 872.108 €, having been versed at a public limit company of production of Riz in the Camargue).

  • In breeding, the 10 larger recipients touched on the whole 2,6 M€, with top of the list an exploitation located in High-Vienna, for an amount of 432.286 €.

An environmental and social cost enormous

The CAP had an environmental and social cost enormous which, for its detractors, reduce considerably the withdrawn benefit. A first reorientation was born at the end of the Eighties with the installation of the structural bases and assistances intended to correct the environmental and social misdeeds followed policies (article 19 then 5b, Mountainous areas…). But in spite of these actions, remained more or less marginal besides according to the choices made by the Member States develop them or not, the CAP has overall continued to privilege the quantity on quality and to support the Concentration exploitations and the reduction in the number of farmers, i.e. to support the agricultural productivity on agricultural employment, and to follow the natural movement of the economy for two centuries.

To rebalance the assistances in favor of rural development

Envisaged by the reform of 2003, the mechanism of the modulation organizes the transfer of financings of direct aids to the agricultural production towards rural development (the “2nd pillar” of the CAP).

Relating initially to 5% of the production assistances, the modulation will be able to reach 20% as from 2008. This mechanism must make it possible to reinforce the rural development programs, insufficiently equipped within the framework with the financial perspectives stopped over the period 2007-2013.

Random links:Barbarossa operation | Knot-grass of Aubert | Unrochides | Hyde | Hunter TIE