Posted: August 29th, 2013
The Common Agriculture Policy
The Common Agriculture Policy
The Common Agriculture Policy (CAP) is a European Union responsible for agricultural subsidy issues. It ensures that measures are taken to maintain prices for commodities at a meaningful level within the European Union (EU) through subsidizing production. The CAP was founded by the European Commission in late 1950 but it was officially established in early 1960 (European Commission, 2000). It offers subsidies to farmers and guarantees farmers high prices for their products. It provides farmers with incentives to enable them produce more products. Its objectives are to increase productivity through ensuring that factors of production and technical progress have optimally utilized. Moreover, it ensures that agricultural communities have fair living standards, stable markets and ensure food is provided at reasonable prices. The CAP has outlived its use by date because it has built a common market but the present CAP has been significantly reformed and the policy is very different.
In addition, financial safety that supports farmers is still in place. The CAP’s aim since its establishment was to support farmers. This is through providing them with financial support to enable them meet their expenses. To date, they are still providing financial support to producers although they are much more selective. In fact, they spend money where it is needed most. For instance, the CAP policy nowadays provides relief for emergency cases such as natural disasters, animal or crops disease outbreaks or other market imbalances that may hinder production in rural economy (Hartell and Swinnen, 2000). The EU supplements income to farmers in order to help them make a better living. However, on return farmers should meet the standards of food safety, biodiversity, protection of landscape and ensuring animal health.
The CAP has outlived its use by date since its establishment to date. The CAP built a common market and removed tariffs for agricultural products when it was first established many European farmers benefited from the CAP because of the effective and efficient services they offered. Actually, over the fifty years ago, the European Union’s objective of providing adequate food for the country emerged from the decade of war due to food shortages. The CAP policy included subsidizing production as well supporting farmers through purchasing surpluses (Ackrill and University Association for Contemporary European Studies, 2000). However, this method is no longer used and the policy of EU nowadays has different motives towards producers. First, they enable producers of all different categories to produce adequate quantities of high quality food for consumption in Europe. Another aim is to make full contributions towards diversified economic progress in remote areas. Lastly, it enables producers to meet high standards of environmental care as well as animal welfare (Tietenberg and Lewis, 2010).
The European Union recently reformed its support systems in order to make subsidies less in the global market. Since it is the largest food importer across the globe, they have committed themselves in ensuring that farmers produce high quality products in abundance in order to compete with other competitors in the global market. Quantity production of food has been their major aim since the establishment of the CAP but recently, they started emphasizing in quantity as well as quality products. This was done because of the increased demand for quality products and competition in the global market from other countries producing similar products. Therefore, the EU has kept emphasizing and helping farmers to produce better commodities in the market (Lynggaard, 2006).
The CAP has still survived since it establishment and it has benefited many small-scale and large-scale producers. For instance, in 2003, the inquiry committees were motivated by the forthcoming of the European Union initiatives. One of the initiatives was the decision made to reform the CAP in 2003. This was made in order to Health Check the CAP in 2008 (Erjavec, 2007). In other words, the decision was made to change the CAP with an aim of making it more practicable and beneficial to farmers. The review was made with regard to the request made in 2005 by the European councils. Another initiative was the budget review that was undertaken in order to enable the CAP outlive up to the present (Nelson, 2001).This was done when the political agreement on the present financial perspective of 2007 to 2013 was reached. In the budget review, one of the first things included was the CAP review. Actually, these initiatives were like a vision. It was suggested that the present arrangements of adjusting the CAP was to be done through a Health Check method of 2008. The CAP’s future was then to be addressed through the budget review.
The three key principles were established in1962 to guide the CAP. These include the community preference, market union and fiscal solidarity (Ackrill, 2002). These principles have been used up to the present and they have been the central element of the European Union. Ball, Fanfani and Gutierrez (2010) argue that political conciliation between the Germany and France led to successful market for European products. The market union between the European and other countries provided access of products into the global market. Germany being the greatest contributor in the budget of EU has helped the European nation to diversify in the agriculture sector. In 2005, the French market has been the net provider of the EU budget up to the present. Although, some countries such as Netherlands and the UK are still the smaller beneficiaries of the European CAP policy and they are unpopular with the European governments (Redmond, 2004).
Today, the CAP has been significantly reformed and the policy is very different. The policy has changed than when it was implemented by Rome Treaty in 1957 (European Commission and Directorate-General for Agriculture, 2001). The CAP policy changes have made it to shift from production goal oriented policy (Nelson, 2001). Although, some of the objectives have been still maintained, the CAP shifted to a Single Farm Payment (SFP) in 2003 (Hennis, 2005). Actually, this resulted due to the CAP reformation in order to meet the long-term goals of the CAP. The policy allows those farmers receiving the SFP to produce any commodities they want a part from perishable foods such as vegetable, tomatoes and fruits. Nevertheless, they oblige farmers to keep the agricultural landscape as well as the environmental in a good condition. Guth (2001) points out that the CAP nowadays requires farmers to respect the environment and observe the principles of sustainable development.
Although the CAP did not emphasize too much on environmental issues when it was first established, the key element nowadays in sustainable development. Therefore, in case the farmers do not respect the environmental standards, there is a penalty measure of reducing their payment. The market intervention mechanisms have significantly reduced (Plut, 2005). The 2008 agreement of the Health Check for the CAP has added numerous values to the farmers thus, they respond better to market changes. Moreover, they are ready to face new market challenges such as competition and low price for their products. Unlike when the CAP was introduced, it was hard for farmers to respond to these challenges but the CAP has been advanced and it has helped the European producers in rural areas.
In conclusion, the CAP has outlived its use by date because it has built a common market but the present CAP has been significantly reformed and the policy is very different. Over the decades, the CAP has been helping farmers with financial support and they still provide them only on emergency cases. The CAP was reformed in 2003 in order to make adjustments and enable it to perform better in the future. However, it was restructured to a Single Farm Payment. It has been advanced in order to meet environmental standards thus achieving sustainable development.
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