The controversy and the future of Common Agricultural Policy of European Union

The controversy and the future of Common

Agricultural Policy of European Union

Problems/benefits

Effect of enlargement

Agriculture is a problematic area in every developed country. Free market economy that allows direct competition of agricultural products can often cause a surplus or shortage of certain products, and quality changes. In order to ensure reliable supply of food member states of the European Union decided to cooperate and transferred the authority over agriculture policy to European level. Common Agricultural Policy was set in 1961 and its aims were to improve production and solve existing problems in agriculture all over EU member states. The previous successes of cooperation with coal and steel, and the fact that most states had difficulties to produce certain goods logically led to deeper cooperation in agriculture, and to CAP. Today, “CAP is regarded as the most developed of the European Union’s policies and covers almost 90% of all agricultural products” (reader). But, also it is regarded as the most controversial and has been responsible for some negative consequences on the industry, and it had to go under many reforms. This essay will explain why CAP has been both celebrated and criticized. Also, it will include the challenges that will be put in front of it by the future enlargement of European Union.

At the time CAP was made, national agricultures had all common problems. Although the different level of development, and different level on dependence on this industry between member states of EC, there were some immense troubles to be solved by Cap: deficits of certain goods, inefficient production practices, poorness of people employed in agriculture, rapidly dynamic prices, substantial variations in quality of products etc. The goals of policy defined in Maastricht Treaty, article 39:

“(a) to increase agricultural productivity by promoting technical progress and by ensuring the rational development of agricultural production and the optimum utilization of the factors ...

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“(a) to increase agricultural productivity by promoting technical progress and by ensuring the rational development of agricultural production and the optimum utilization of the factors of production, in particular labor;

(b) thus to ensure a fair standard of living for the agricultural community, in particular by increasing the individual earnings of persons engaged in agriculture;

(d) to assure the availability of supplies;

(e) to ensure that supplies reach the consumers at reasonable prices.” (TEU)

Since its foundation CAP has improved the agriculture of Europe in a great sense, but critics would say that costs of the successes are considerably high for all. Some of the goals were fulfilled with little negative consequences, while others were solved with controversial methods that became a huge burden for the budget and had many counter-effects.

The changes in Europe’s agricultural structure and productivity since 1961 caused by CAP were enormous. Thanks to the investment in technology, there was a growth in productivity of farms, decrease in people employed in agriculture, rapid urbanization and therefore prosperity in other sectors of economy. Statistics show that “the workforce employed in agriculture declined from 11.3% in 1973 to 9.4% in 1980 and only 5.7% in the whole of the EU in 1992.” (Hitiris, 190) Productivity growth was rapid, and we can say that the aim of CAP to restructure the farming to make it more efficient is being fulfilled. The growth of the efficiency of the labor can be noticed on the fact that: “ In 1960 over 15 million people in the original six had worked on the land. In the mid-1970s the agricultural population of the enlarged EC was only 14 million, falling to 10 million by the mid-1980s” (Urwin, 187)

Second goal of CAP is a social mission: to help the quality of life of the people in agriculture. This went little against the economic productivity and caused many negative consequences on it, especially by huge costs.

The interventions that were made were not only subsidizing the farmers, that is a huge burden for EU budget but artificial manipulations with prices and setting of standards. These two were criticized by many liberal economists as standardization brought prices up, and artificial price setting caused surpluses and deficits.