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What is the CAP?

11 May 2010

The CAP is a form of protectionism designed to defend European producers from cheaper products outside the EU.

This was once done by subsidising agricultural produce but is now achieved by the EU deterring imports from outside the EU with a system of import tariffs and simultaneously subsidising farmers through the Single Farm Payment. The EU spends around 43bn Euros annually on CAP. In 2010 CAP will account 31% of the EU’s budget.

The original CAP

The CAP originated in the 1950s. Western Europe was damaged by years of war. Agriculture was crippled and food supplies were not guaranteed. CAP began operating in 1962.

Early CAP encouraged better agricultural productivity so consumers had stable supply of food and ensure EU had viable agricultural sector.

CAP offered subsidies and systems guaranteeing high prices for farmers, providing incentives for them to produce more.

Financial assistance was provided for the restructuring of farming.

CAP was successful in meeting its objectives of moving the EU towards self-sufficiency from 1980s onward. However, it had to contend with almost permanent surpluses of major farm commodities which had to be exported or disposed of. This led to high budgetary cost, distorted worlds markets and did not always serve interests of farmers which led them to become unpopular with consumers and taxpayers. Concerns grew about environmental sustainability of agriculture.

The CAP of today

The CAP needed changed and it came. Important changes were made during the 1980s but more significant changes were made in the 1990s. Production limits helped reduce surpluses. There was a new emphasis on environmentally sound farming. Farmers had to respond to the public’s changing priorities (MacSharry reform 1992).

The Agenda 2000 reform promoted the competitiveness of European agriculture and had a major new element – rural development policy encouraging many rural initiatives while helping farmers to re-structure their farms, diversify and improve their product marketing.

In 2003 further fundamental reform was agreed. Farmers were no longer paid just to produce food. Today’s CAP is demand driven. It takes consumer and taxpayer concerns into account while giving farmers freedom to produce what markets need. Farmers still receive aid but face reductions in direct payments if new standards are not meet e.g. respect to environment or food safety. Since 2005 farmers are no longer subsidised, but instead receive a lump-sum called the Single Farm Payment (SFP) and are encouraged to produce in response to consumer demand.

Future of the CAP

The CAP is always looking to adapt and change in the face of new challenges. In 2008 a ‘Health Check’ was carried out on the CAP. It was designed to modernise, simplify the CAP and remove restrictions on farmers, thus helping them to respond better to signals from the market and to face new challenges.

The European Commissioner for Agriculture and Rural Development, Dacian Ciolos launched a debate on the future of the CAP in the European Union on 12th April 2010. The debate relates to CAP’s future objectives after 2013 when new CAP rules will be enforced. The debate is public and is open to organizations, think tanks, rural networks and the general public. In July 2010 there will be a conference to synthesise the public debate.

Four questions are proposed to structure the general debate:

1 Why do we need a European Common Agricultural Policy?

2 What are society’s objectives for agriculture in all its diversity?

3 Why should we reform the current CAP and how can we make it meet society’s expectations?

4 What tools do we need for tomorrow’s CAP?

The following set of questions is proposed to guide contributions more specifically on the rural development policy aspects. Question A corresponds to the general questions 1 and 2, while question B and C relate to questions 3 and 4.

A. What should be the objectives of the future rural development policy?

B. How can the policy instruments be made more effective?

C. How can the management of the policy be improved?

How to contribute to the debate?

Consult and create links with http://ec.europa.eu/agriculture/cap-debate

The Rural Network NI is keen to assist members in contributing to the debate over the coming months. Let us know ideas you may have about how best we do this and/or add comments about the debate on our online forum.

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