Common Agricultural Policy (CAP).

Geography – Miss Chant

Cheryl Samuels 13F

Common Agricultural Policy (CAP)

The Common Agricultural Policy (CAP) is designed to deliver economic viability, environmental improvement and rural development. The proposal set the framework for creating a competitive, sustainable EU agriculture industry. The EU had to find a fair, practical and acceptable way forward, capable of delivering real benefits to EU farmers and to society as a whole.

Increase agricultural productivity thus to ensure a fair standard of living for agricultural producers;
Stabilise food prices and food supplies;
Assure availability of supplies to consumers;
Ensure reasonable prices to consumers.

After World War 2 agriculture was badly disrupted and rationing highlighted the importance of countries being self sufficient in food supplies. In many countries farming was very important. By 1957 at the Treaty of Rome it was recognised that agriculture was declining as industry grew. The CAP was necessary because food has a low price of elasticity demand meaning that consumers will not necessarily but more food because it is cheaper because people can only eat so much so therefore on a good year farmers may receive a lower income therefore there is no incentive to boost production the next year, they may even cut down the production and in turn this could cause a shortage and the prices to rise again. This could cause a long-term decline or uncertainty in food output. The CAP is designed to make the market more stable.

The CAP aims to aid farming by:

Preventing the prices farmers get for their products from falling below a certain level. To prevent the price falling too par, a price level is set by the EU called the Intervention Price. This prices ensures the farmer’s income and the price don’t fall further.
Controlling imports of cheap food from countries outside the EU, which could undercut EU farmers. Cheap imports into EU countries would undermine the EU’s attempts to maintain farmers’ income because the price of EU produce would have to fall in order to compete. To control this a ...

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The CAP aims to aid farming by:

Preventing the prices farmers get for their products from falling below a certain level. To prevent the price falling too par, a price level is set by the EU called the Intervention Price. This prices ensures the farmer’s income and the price don’t fall further.
Controlling imports of cheap food from countries outside the EU, which could undercut EU farmers. Cheap imports into EU countries would undermine the EU’s attempts to maintain farmers’ income because the price of EU produce would have to fall in order to compete. To control this a levy (tax) is imposed on all imports to raise their price.
Financing projects to improve agricultural efficiency, particularly in Southern Europe when farming productivity and yields are low. Grants are given to EU countries to support projects such as irrigation, drainage, field enlargements, new roads and other infrastructure improvements

Problems with CAP:

By 1991 CAP was costing EU tax payers and consumers £80 billion a year which works out at £250 per person and this cost was rising.
Support prices encouraged farmers to boost production as much as possible and new technology provided means of doing this. New types of seed, chemical fertilisers and pesticides, improved machinery, new irrigation and drainage systems and new farm buildings helped to increase yields. Also new machinery meant less farm workers were needed
Surplus became a problem because government was buying surplus farm produce to maintain the farmers income and they had nowhere to put it. Storing in intervention warehouses was very expensive, subsidising exports into countries outside the EU (known as dumping) undermines prices being received by that countries farmers and is therefore unpopular. So it is either, given away as foreign aid, fed to livestock or destroyed.
Farmers get unequal benefits depending on the size of their farm.
There is opposition from other countries such as USA and eastern European countries because traffic barriers make it hard to sell their produce in the EU while subsidised EU produce is dumped in their countries undercutting their farmers.
Before the euro, exchange rates resulted in price variation and it was easy to get cheap imports within countries in the EU.
Conservationists are against the CAP because of environmental threats such as new roads being placed etc.

Common Agricultural Policy (CAP).

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