Executive Summary
Initiated in 1962, the Common Agricultural Policy (CAP) is a system of agricultural subsidies. These subsidies work by guaranteeing a minimum price to producers, by deficiency payments or by direct income payments. The purpose of this paper is to question this policy by analyzing several impacts. As a result, we come to following main findings: The CAP causes budget troubles and costly disposal problems. Although agriculture is a declining sector that provides only about 4% of European jobs and 2% of European GDP, it is still provided with 46% of the EU budget in 2005. Furthermore, it is financed at the expense of consumers and taxpayers.
The EU export subsidies and the dumping cause worldwide distortions in the agricultural sector. Moreover, CAP policy makers use misleading justifications of their practices. Although the CAP is often promoted as helping small family farms, the largest part of it goes to huge commercial corporations and to some royal families. The distribution is unequal to the degree that 20 % of the farms (i.e. the largest farms) get 80 % of the benefits. The smallest farms (40 % of the total number) share only 8 %. As such, small family farms receive subsidies of quite an insignificant nature.
The CAP has encouraged the industrialization of agriculture, giving rise to factory farming practices and widespread animal suffering. The problem was that industrial farming led to more intensive use of land and chemicals.
Former reforms caused the EU to proceed from price supports to direct income subsidies. Thus, the CAP could be gradually improved, but today there still remain a lot of problems inherent, that allow to question the “raison d’être” of the CAP. [...]
Table of Contents
1. Introduction
2. The CAP and its impact
2.1. Methods of support
2.2. Budget troubles and “food mountains”
2.3. Dumping - “Everything but EU farms”
2.4. Unequal distribution of benefits
2.5. Environmental damages
3. Reforms
4. Evaluation of today’s CAP
4.1. Instruments of the CAP
4.2. Budget troubles and “food mountains”
4.3. Dumping
4.4. Unequal distribution of benefits
4.5. Environmental damages
Research Objectives and Key Topics
This paper examines the economic, social, and environmental impacts of the European Union's Common Agricultural Policy (CAP) to determine whether the policy remains justified in its current form.
- Analysis of CAP subsidy mechanisms and their financial implications.
- Evaluation of world-market distortions caused by EU export dumping.
- Assessment of the unequal distribution of benefits among farm sizes.
- Review of environmental consequences resulting from intensive agricultural practices.
- Critique of historical and recent reform efforts.
Excerpt from the Book
2.5. Environmental damages
The CAP is seen as a social tool to assist economically deprived areas and preserve the rural environment. Current changes to the system have switched money away from payments for planting specific crops to flat-rate payments for any land capable of cultivation.
The policies of the CAP affect two-thirds of the Union’s land and have had a major impact on how the land is used. The resulting change that may be called ‘the industrialization of farming’, has occurred throughout the developed world, but its appearance in Europe was fostered and guided by CAP spending. The problem is that industrial farming led to more intensive use of some land and, as the Commission put it: ‘This had a negative impact on, amongst other things, the environment, the countryside and the quality of certain products offered to the consumer’ (Baldwin/Wyplosz, 2004, p. 226).
The CAP has also been blamed for encouraging environmentally damaging intensive farming. Its commitment to guarantee prices makes it economically worthwhile to use all available land, with the aid of chemicals, to grow more crops than demanded by consumers. The public also is aware of that high prices have encouraged intensive agricultural practices with seriously adverse environmental impacts.
Summary of Chapters
1. Introduction: Outlines the primary objectives of the CAP as stated in the Rome Treaty and introduces the critical approach taken regarding its contradictory outcomes.
2. The CAP and its impact: Analyzes the functional mechanisms of support, the resulting budget issues, global market distortions, social inequalities, and environmental degradation.
3. Reforms: Reviews the history of CAP reform efforts, from early attempts like the Mansholt Plan to the MacSherry and Agenda2000 reforms.
4. Evaluation of today’s CAP: Provides a concluding critical assessment of the effectiveness of the instruments and current challenges facing the reformed policy.
Keywords
Common Agricultural Policy, CAP, agricultural subsidies, European Union, dumping, export refunds, food mountains, land use, industrial farming, environmental impact, trade distortion, WTO, farm benefits, direct income payments, EU enlargement.
Frequently Asked Questions
What is the core focus of this research paper?
The paper provides a critical economic analysis of the European Union's Common Agricultural Policy (CAP), questioning its efficiency and its wide-ranging negative impacts.
What are the primary thematic areas covered?
The study examines financial sustainability, global agricultural trade distortions, the socio-economic distribution of subsidies, and the environmental consequences of intensive farming.
What is the ultimate goal of the work?
The aim is to evaluate whether the CAP's current structure remains justified given the significant financial, environmental, and social problems it creates.
Which scientific methods are utilized?
The research relies on an economic analysis of support mechanisms (such as variable levies and deficiency payments), welfare effects (consumer and producer surplus), and a review of historical policy data and institutional reports.
What topics are discussed in the main body?
The main body details the mechanics of subsidies, the history of surplus food production, the effects of export dumping on developing nations, and the disproportionate distribution of benefits toward large commercial farms.
Which keywords best describe this work?
Key terms include Common Agricultural Policy, subsidies, dumping, industrial farming, trade distortions, and CAP reform.
How does the CAP affect the distribution of wealth among farmers?
The research indicates that the distribution is highly unequal; the largest 20% of farms receive approximately 80% of the benefits, leaving small family farms with minimal support.
What is the role of the "Everything but EU farms" concept?
It is a term used to characterize the negative impact of EU agricultural policies on non-EU farmers, particularly in Least Developed Countries, by preventing them from competing fairly in the global market.
- Citation du texte
- International Economics M.A. Kenân Özkara (Auteur), 2005, Arguments against the Common Agricultural Policy of the EU, Munich, GRIN Verlag, https://www.grin.com/document/53638
