The CAP: Looking Back, Looking Ahead

Abstract

This paper offers a brief overview of the Common Agricultural Policy (CAP) from its origins until the present day in order to identify the factors that have been shaping its evolution. It then attempts to evaluate how persistent these trends will be in the future, whether new policy imperatives are gaining relevance in CAP reform and what they imply for the CAP over the coming years. Budget crises, international trade pressures and enlargement have driven the CAP reforms of the last fifteen years. In the future, change will be driven by the need to maintain the economic rationality and political acceptability of agricultural policy in an enlarged European Union of twenty‐seven heterogeneous member states. Further decentralization of decision making and financing can be expected.

Key Words:

• European agricultural policy
• direct payment
• second pillar
• modulation
• subsidiarity
• re‐nationalization

Acknowledgement

The very helpful comments and suggestions of three referees are greatly appreciated. Any remaining errors are those of the author.

Notes

1. Oilseeds and protein crops were also brought into the area payment system.

2. Similar conversion of price support into a direct payment incorporated into the SFP was implemented for cotton, hops, tobacco and olive oil in 2004, for sugar in 2005 and wine in 2007.

3. Countries were allowed to retain partial decoupling for specific commodities at given rates and subject to national ceilings. In fact, about 90 per cent of direct payments made are on a fully decoupled basis (Grethe 2006).

4. These SMRs are detailed in EU directives, many of which have been part of EU legislation for some years.

5. The issues targeted and the criteria to be applied are set out in Annex IV of Regulation 1728/2003. It has been left to member states to prioritize the choice of issues and to draw up detailed rules, taking into account ‘the specific characteristics of the areas concerned, including soil and climatic condition, existing farming systems, land use, crop rotation, farming practices, and farm structures’ (Article 5).

6. In the negotiations over the Agenda 2000 reform in early 1999, Germany (in the Presidency) favoured introducing co‐financing for direct payments. The German proposal was dropped only days before the final decision, largely at the insistence of France. This option has no support from the current Commission.

7. This argument applies principally to the countries of EU‐15. Starting with the accession of Greece in 1981, with each enlargement the EU has imported a new (even if temporary) ‘small farm problem’. It will take another generation before newer member states reach this point.