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The aim of the common
agricultural policy is to provide farmers with a reasonable
standard of living, consumers with quality food at fair prices
and to preserve our rural heritage. The policy has evolved to
meet society’s changing needs, so that food safety,
preservation of the environment, value for money and
agriculture as a source of crops to convert to fuel have
acquired steadily growing importance. |
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Moving with the times
Born 50 years ago when the
founder members of the EU had not long emerged from a decade
or more of food shortages, the Common Agricultural Policy
(CAP) began by subsidising production of basic foodstuffs in
the interests of self-sufficiency and food security. As the
most fully integrated of EU policies, the CAP takes a large
share of the EU budget. Nevertheless, this has dropped from a
peak of nearly 70% of the EU budget several decades ago to 36%
of the budget, reflecting cost savings from reforms, a shift
of some agricultural spending into rural development and
expansion of the EU’s other responsibilities.
Beef and butter mountains, milk and wine lakes have been a
thing of the past for two decades as a result of a first wave
of reforms. As a result of further reforms since the beginning
of the decade, subsidies on quantities produced have largely
been replaced by payments to farmers to guarantee they receive
a decent income and linked to compliance with broader
objectives. These include environmental, food safety, animal
and plant health, and animal welfare standards, and
expectations on keeping farmland in good condition in order to
preserve traditional rural landscapes, and bird and wild life.
Paying increasing amounts of attention to hygiene, food
quality and animal welfare addresses concerns that more
intensive farming and animal husbandry were to blame for ‘mad
cow disease’, dioxin in milk, artificial hormones in meat and
other food-related health scares.
The shift from subsidies for production to direct payments
to farmers represents the most radical change to the CAP since
it was created in 1958. It is being phased in and extended to
products not included during the last major series of reforms
in 2003. These include cotton, hops, tobacco and sugar. As a
result of reforms in the sugar sector agreed in 2005, the EU
will switch from being the world’s second largest exporter to
a net importer. However, changes in society’s needs are
opening up new opportunities for farmers to grow sugar – as
well as cereals and other crops - for biofuel for vehicles and
biomass for power generation.
Moving from support for products to support for farmers is
in the interests of fairer world trade as support for the
farmers who need it most reduces the risk that trade will be
distorted by EU subsidies for export of additional production.
These changes thus prepared the EU for the ‘Doha’ round of
international trade liberalisation talks, where the EU has
agreed to eliminate export subsidies altogether by 2013.
However, even without further liberalisation, the EU is
already the world’s largest importer of food and the biggest
market for Third World foodstuffs.
The next steps are:
- to
simplify the rules governing agriculture by overhauling the
laws which have grown up piecemeal over the last five
decades
- to
replace different market organisations and rules for
different products with a single common market organisation
and a uniform set of rules
- to
work with national governments to cut the red tape farmers
face in qualifying for EU support.
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More drivers of change
Worries about the cost of the CAP and fewer fears about food
security were not the only drivers of change. As agriculture
modernised and the EU economy became more service-oriented,
the number of people working on the land dropped to 7% now
compared to more than 20% half a century ago. Even though 10.4
million people still work in agriculture and more than 40% of
the area of the EU is used for agriculture, survival of rural
economies can no longer be taken for granted.
Rural development was accorded special recognition as
part of the EU’s ‘Agenda 2000’ agricultural reform package.
In 2006, spending on rural development will account for almost 10% of the
EU budget. Taking a comprehensive approach to the rural
economy is resulting in greater importance being attached to
forestry, the recreational importance of the countryside,
biodiversity, diversification of the rural economy,
environmental protection in rural areas, and job creation |
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The 2003 reforms also equipped the CAP for enlargement in
May 2004, when the 15 became 25 and the number of farmers in
the EU increased by nearly 70%. Farmers and food processors in
the new member countries received funding to modernise even
prior to enlargement. Over the first three years of
membership, a special funding package tailored specifically to
the needs of these farmers is providing €5.8 billion to help
early retirement, less favoured areas, environmental
protection, afforestation, semi-subsistence farms, producer
groups and compliance with EU food, hygiene and animal welfare
standards. Some CAP rules are being phased in gradually to
allow time for adjustment. |
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The EU promotes the production of quality – and
internationally competitive — foodstuffs through financial
assistance to innovation in farming and food processing and
the use of voluntary quality labels. These include labels to
designate foodstuffs coming entirely from one area of the EU
using recognised know-how, for well-known foods with a clear
geographic tie to a certain part of the EU, foods made of
traditional ingredients or using traditional methods and a
label for organic foods.
The EU not only has rules defining organic foods, but also
on what constitutes an organic farm. Recognising the
importance consumers now attach to organic foods, it is
promoting this type of farming still further with an Action
Plan for Organic Food and Farming. The European Commission in
late 2005 also proposed new rules to make it clearer to
consumers what they are buying and to farmers what rules they
must follow if they claim their crop or produce is organic.
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