Agricultural Policy of the European Union

The years immediately following the Second World War, Europe was marked with food shortages, a situation that needed immediate and lasting action. The European Union began as a group of only 6 countries in 1957. Agriculture was the biggest industry and had huge political and social influence. It was agreed that agriculture could not be treated like any other industry – the Common Agricultural Policy was born.

The Common Agricultural Policy (CAP) was brought in by the EU in 1962 with a number of aims. It aimed to:

ü increase agricultural production in member countries.

ü improve the standard of living experienced by farmers.

ü maintain prices and supplies of food at a reasonable cost to the consumers.

The EU has brought in many rules and regulations to try and help farmers in all of its member countries. CAP has delivered high levels of support to EU farmers and has had substantial implications for world markets for agricultural products. Over time the CAP has been adapted to meet changing community expectations, internal budgetary constraints and external pressures.

CAP used to spend 70% of the European Union’s total budget through the following ways:

Subsidies – This was money given to farmers per head of livestock to help towards the cost of rearing them.

Set–aside – This was money given to farmers when they did not grow food on an area of their farm.

Guaranteed prices – Farmers were guaranteed that if their crops did not get a certain price at market the EU would make up the differences.

Quotas – A set amount of produce that a farmer can produce. If the more is produced the farmer is fined. This was introduced after the overproduction of milk.

Grants – This is money given to farmers who do activities that are environmentally friendly such as planting hedges.

In 1992 the policy was reformed. The changes to the policy removed much of the subsidies and price support that the original policy had, as the EU realised that the intensive farming was harming the environment.

Reforms of the Common Agricultural Policy (CAP) have reduced the price guarantees for food production, but at the same time have increased the sums available for support of new enterprises. Many farmers, faced with a situation where they can no longer rely on a guaranteed market for their produce, will need to consider diversification (the process where farmers seek alternative income, other than from growing food crops or conventional livestock keeping).