The Common Agricultural Policy – Europe's Agricultural Success Story

The Common Agricultural Policy (CAP) is a European-wide initiative to support farmers and rural areas across the European Union (EU), to both make farmers more competitive and sustainable. It also helps provide high quality and safe food to the EU's 447 million citizens, whilst also contributing to climate action and preserving various natural resources.

The policy consists of three significant parts:

• Direct payments to farmers – this is a stable income provided directly to farmers to protect them from fluctuating prices and bad crop years. This income also goes towards paying for extra costs that would likely be unaffordable for farmers otherwise such as food safety and environmental / animal welfare standards.

• Measures to stabilise markets – market measures are used to stabilise agricultural markets and prevent upheaval and volatility. This is done by enforcing specific rules for international trade among EU member states, providing EU countries funds to deal with issues by themselves and in times of crisis, buying and storing agricultural goods even if they are not needed, to protect farmers and their livelihoods.

• Support for rural areas – the EU invests in rural areas to keep these areas from depopulating and to give these areas the extra support they need to match the development of urban areas. These policies help the 21% of EU citizens who live in rural areas, by modernising farms, building up rural infrastructure and raising the next generation of farmers.

The CAP also acts as a subsidy for many of the less urbanised and developed EU member states, preventing rural areas in these states from falling behind the urban areas of Europe.

The CAP is, and has always been, one of the largest and most expensive functions of the EU. As part of the EU budget agreed in December 2020, the CAP will receive €386.6 billion, out of a total budget of a total budget of €2.18 trillion for the period 2021-27. Of this funding, 72% is planned to go towards direct payments, with 25% towards rural development and the remaining 3% towards the supporting the agricultural sector in other ways.

Direct payments: €189.20 billion. Rural Development: €66.00 billion. Sectoral: €8.90 billion.

The CAP has existed for the entirety of the EU's existence, being created as part of its predecessor, the EEC. The CAP was formed in 1962 to boost the agricultural sector, which among the six original member states at the time was lagging behind other sectors in terms of productivity and incomes. By adopting identical competition rules across countries, stabilising markets with government interventions (such as tariffs) and income support for farmers, the European agricultural sector began to quickly recover during the 1960s.

In 1970, the Mansholt Plan for modernisation was adopted by the EU. Despite increases in food productivity and availability over the previous 8 years, farmers' incomes remained stagnant; worried that market imbalances may arise from a mix of over-production and subsidies, the EU created the Mansholt Plan. This plan would reform the CAP, with the aim of optimising land under cultivation and merging farms to create larger, more self-reliant units.

These reforms would lead to further productivity increases in the agricultural sector, to the point that in the early 1980s, for the first time, agricultural production exceeded demand. Consequently, surplus food was wastefully dumped creating so-called 'butter mountains' and 'wine lakes'. In response, the EU adopted policies of supply management into the CAP, primarily quotas on certain products, to prevent over-supply.

In 1985, the Common Agricultural Policy accounted for 73.3% of the EEC's total budget:

In 1992, with the global economic and political shift towards globalisation and free trade, the EU adopted the MacSherry reforms, the first large-scale reform to the CAP. This involved moving away from a market support model, where the market was artificially stabilised, towards a producer support model, where farmers would be directly subsidised. No longer would farmers receive unlimited, guaranteed prices for their goods, rather farmers would be personally subsidised. These reforms also aimed to reduce the overall budget of the CAP (which at the time still amounted to over 50% of the EU's entire budget) whilst also introducing environmental and food quality standards, to make European agriculture more sustainable.

In 1999, rural development was added to the CAP, in preparation for the expansion of the EU into the former Eastern Bloc. The 'Agenda 2000' programme was made to promote this new pillar of the CAP and how rural development could improve agricultural competitiveness, provide alternative sources of income in rural areas and strengthen social cohesion too.

In 2013, further reforms to the CAP were made, to adapt it to the issues of the 21st century, primarily the disparity between large agri-business and small farms, as well as climate change. Reforms included making the distribution of support more equal by limiting the budget for larger farms, better income targeting for smaller farms and also creating green payments, to encourage more-sustainable farming.

The latest batch of reforms sought to give greater autonomy to member states to achieve the CAP's policies. This was done by setting up 'strategic plans' for every member state, which were decided upon on a national rather than EU level. In addition, further environmental incentives were introduced as well as for the first time a commitment to protecting agricultural workers' rights.

One of the main focuses of the CAP in recent decades has been reducing how much of the EU budget is spent on the CAP. As the Union has evolved from a primarily economic union to a multi-facetted supranational institution, less and less of the EU#s total budget is now being spent, as a percentage, on the CAP.

Criticism of the CAP has changed throughout the years. During its initial, market-support phase, the CAP was heavily criticised for causing over-production and disproportionately benefitting larger farms. Nowadays, CAP is criticised for being opposed to the general ideas of globalisation, that being free-trade and an even playing field for various competitors to sell products to each other. The main concern is with 'Anti-Development', a term denoting how developing nations, who are more reliant on agricultural exports abroad compared to EU countries, are at a big disadvantage compared to European competitors, who are heavily supported with subsidies financed by the CAP. There are concerns that this preference for domestic producers is preventing the development of less-developed nations abroad, by hindering their exports.

Other criticisms include: the CAP's subsidies favouring larger farmers, since subsidies became linked to the size of farms in 2003, environmental concerns caused by intensive agriculture, including a 50% fall in farmland bird population from 1980 - 2009 and equity among members, with newer members not receiving the same rates of subsidies as more-established members.

Despite the CAP's high costs, Europeans generally know about and support the CAP. It has helped Europe become self-sufficient with its food supply whilst also creating some of the strictest food quality standards in the world. With human-induced climate change an ever-growing problem, alongside worsening inequality and a more volatile global economy, the CAP will be vital for the EU in the future in achieving its goals and maintaining and improving Europe’s standards of living.