So, what has proved so controversial about these provisions? One of the primary issues concerns how beneficial the policy has been to individual member states. When the CAP was formulated it was widely accepted as a trade-off between France and Germany. France feared that Germany may come to dominate the European scene with its larger and more developed industrial sector. Therefore, France, whose agricultural sector accounted for twenty six per cent of the labour force in 1955 compared to Germany’s eighteen per cent (El-Agraa, 2001, pg232) had a lot to gain from protecting its farmers. This situation only becomes controversial when the question of reform arises. France, despite a decline to five per cent of employment in agriculture, still relies more on the industry than most other EU members, as do Spain, Italy, Greece, Ireland and Portugal. These agriculturally dependent countries have no desire to see a radical reform of the CAP as they are the main beneficiaries. Given the structure of CAP finance these nations tend to receive more from the budget than do members with more efficient agriculture sectors like Germany, Britain, Sweden and Austria who tend to pay more than they gain back. Indeed, recent examples of the controversial nature of this subject can be found in the much publicized ‘bust up’ between British Prime Minister Tony Blair and French President Jacques Chirac.
The CAP is no longer relevant as it was designed for an era when circumstances were different. “The conditions which led to its creation no longer exist” (Jones, 2001, pg218). CAP was created in order to ensure self sufficiency. In the 1950’s, the EC only produced eighty five per cent of its food requirements and therefore the creation of a policy which encouraged farmers to produce as much as possible by offering a financial incentive was sensible as Europe now produces twenty per cent more than it requires (http://adepta.heb.fr.colt.net/asp/panorama_page.asp?page=93&LNG=anglais). However, we now have a situation where European farmers are engaged in gross over-production. So much so that European stockpiles of surplus food are referred to as “butter mountains” and “wine lakes”. This increase in agricultural production is not reflected in demand, and therefore creates surpluses which must later be destroyed or dumped on internal or world markets with a substantial waste of economic resources Many complain against the injustice of waste in foodstuffs within Europe when many other nations suffer from problems of starvation. Others complain that such stockpiles are costly. This argument may carry some weight as it must be remembered that costs will include paying for storage facilities as well as the means to transport surplus goods to warehouses. The costs of purchasing the food surpluses are also an issue.
One of the most prominent goals of CAP was to ensure low prices for consumers. However, it is debatable whether this has been achieved. The CAP costs around fifty billion euros (or roughly about thirty five billion pounds). This money is taken from the EU budget, and as we already know, accounts for around half of it. Since the EU budget results from taxation on member state’s citizens it may be fair to suggest that consumers are paying more indirectly for their food. Furthermore, it is difficult to suggest that food prices in Europe are low on a global level. Only once since the establishment of the CAP have average food prices in the rest of the world been lower than in the EU, in 1974 (Jones, 2001, pg218). Admittedly, however, EU households spend just fifteen per cent of household income on food as opposed to fifty eight per cent in Romania or fifty four per cent in Bulgaria (Wallace and Wallace, 2000, pg201). Another reason for high prices is the lobbying of the Agricultural Council by farmers (whose interest is in higher prices) when the Council is undertaking its yearly review. The Council needs to tread carefully therefore and it may be a case of an attempt to satisfy two parties equally ends in the dissatisfaction of both.
The CAP has resulted in inequality and the fortunes of some farmers are vastly different to others. Eighty Per cent of the EAGGF fund is spent on just twenty per cent of Europe’s farmers. This is due to the way in which the EAGGF is structured. Those with larger farms will be able to produce more and hence will receive more from the EU as a result under the price support mechanism. Those with smaller farms require newer equipment and such like in order to increase production. However, the small amount of cash set aside by the EU for this purpose limits the possibilities of this. A great deal of debate centers upon the fact that farmers receive an unfair advantage in comparison to other workers. “Almost half of Union farmer’s incomes derive directly or indirectly from subsidies and protection measures” (Jones, 2001, pg219). No other workers receive such protection as they are subject to market fluctuations. Miners or factory process workers do not receive so much state aid and this has resulted in some viewing the agricultural sector as insulated. Given the self sufficiency, indeed over provision, of the EU (which has inevitably resulted in a loosening of the view of the uniqueness of agriculture) it is becoming increasingly difficult to justify such extensive support of one industry.
CAP has inevitably resulted in tension with other nations around the world. Due to EU policy being directed towards keeping imports to a minimum this has resulted in other nations having difficulty in gaining access to European markets. “The CAP has developed in tension with international trade and been a recurrent source of argument between the EU and its trading partners” (Wallace and Wallace, 2000, pg193). The CAP has been a major headache for the USA which has an agriculture industry that also tends to produce and therefore requires an export market. The USA has pushed hard for liberalization of the CAP whilst the EU has remained largely unwilling to change its fundamental principles, despite some concessions in the Uruguay Round in 1994 through GATT (which is now the World Trade Organisation).
CAP fraud has proved hard to tackle and has cost a great deal. Complex operating procedures and the large amount of farming transactions ensure that this has been the case. Verification of claims has been a responsibility for national governments and member states have been “lax” (Jones, 2001, pg219) in carrying out this task. Many problems have occurred such as claims for produce that does not actually exist and re-labelling of imports as produce of the EU in order to obtain subsidies. Such is the extent of fraud within the CAP system that it accounts for half of all fraud wastage in the EU budget. It is now wonder that this has contributed to the controversy of CAP as members of the public do not take kindly to the mis-use of their money.
The final area of controversy concerns the environment, or rather the alleged negative effect of CAP on it. Increased production requires intensive methods of farming. These methods could include the use of fertilizers, crop sprays, pesticides etc. Of course, the use of genetically modified crops would help production levels and GM crops are the subject of intense debate. Many of these products could be harmful to the environment and such is the sensitivity of environmental issues in the political field that controversy is entirely inevitable.
The EU have been aware throughout the existence of CAP and reform has been spoken of consistently ever since the beginning. In the late 1960’s the “Mansholt Plan” proposed that more money should be made available for guidance purposes which would ease the problem of inequality. The same plan also suggested that, in order to reduce production, farmers should be encouraged and helped to change their vocation. In the event, the reforms could not take place due to resistance from some member states. However, the fact that reforms were introduced at all suggests that all was not well.
The MacSharry reforms of 1992 were much more successful. These reduced minimum guaranteed prices for several products and the result was a drop in European prices to more closely resemble global prices. Direct income support for farmers in place of price support mechanisms became more favoured. Farmers would also be rewarded for not growing crops on some parts of their land. This would reduce surpluses by bringing down supply.
Although, the EU has made attempts to stand up to criticisms of the CAP it is still viewed with suspicion by many and this criticism is only likely to increase in the next few years. An influx of new members form Eastern Europe which have major agricultural sectors (far and above anything possessed by the existing members) will require more finance which may be unsustainable if the current system remains in place.
It is clear that the Common Agricultural Policy is a highly controversial matter for various reasons. The fact that it benefits some states more than others, its lack of relevance to the modern world, the high costs of its operation, the inability to secure low food prices, inequalities in the farming community, international conflicts, fraud, the negative effect on the environment and the likely cost of European expansion have all meant that it is seen by many as a waste of time and resources. It has been that way throughout its existence, despite efforts at reform. We can be certain that CAP will remain controversial in future as it faces up to new problems but it must avoid trying to deal with these with old solutions.
Bibliography
BOOKS
Wallace, Helen & William, Policy-Making in the European Union, 4th Edition, Oxford University Press, Oxford, 2000
Nugent, Neill, The Government and Politics of the European Union, 4th Edition, Palgrave, Basingstoke, 1999
Jones, Robert, The Politics and Economics of the European Union, 2nd Edition, Edward Elgar, Cheltenham, 2001
El-Agraa, Ali M, The European Union: Economics and Policies, 6th Edition, Pearson, Harlow, 2001
Journals
Journal of Common Market Studies, Volume 37, No.3, 1999
Websites
Wyn Grant’s CAP Home Page - http://www.eipa-nl.com/public/public_publications/ Summaries/02/2002_C_01.doc
Adepta -http://adepta.heb.fr.colt.net/asp/panorama_page.asp?page=93&LNG=anglais
