Common Agricultural Policy

The Common Agricultural Policy (CAP) is the agricultural policy of the European Union. It implements a system of agricultural subsidies and other programmes. It was introduced in 1950 and has undergone several changes since then to reduce the cost (from 73% of the EU budget in 1985 to 37% in 2017) and to also consider rural development in its aims. It has been criticised on the grounds of its cost, and its environmental and humanitarian impacts. The circumstance that led to the development of the CAP occurred in the late 1950s to late 1960s. At the time, there was no example of a successful agricultural integration in Europe. However, two main factors contributed to the creation of this policy. This includes the promise European Economic Community (EEC) made to France bargaining the integrated agriculture policy in favor of France's part in ratifying the Treaty of Rome and due to a lack of substantial policy in agriculture beyond a few pre-existing legal stipulations that some considered, “weak, vague and highly underdeveloped.” Thus, leading to the creation of article 39 in a set of five social and economic objectives. As part of building a common market, tariffs on agricultural products would have to be removed. However, the political clout of farmers and the sensitivity of the issue made it take many years before the CAP was fully implemented. The Spaak Report of 1956 stated that a European common market that excluded agriculture was unthinkable. It argued that security of food supply was paramount and raised a series of questions about agriculture that needed to be answered by policy-makers. The Treaty of Rome, signed in March 1957, established the European Economic Community (EEC) and it was mainly due to the French pressure that the Treaty included agriculture. However, due to disagreements within the Six over agricultural policy, the articles on agriculture were vague and policy making was left until after the Treaty had been signed. Article 39.1 of the Treaty set out the objectives of the CAP: to increase productivity through technical progress and the best use of the factors of production (such as labour); to ensure a fair standard of living for communities employed in agriculture; to stabilise markets; to secure the availability of supplies; and to enforce fair prices. Article 39.2 stated that policy makers must take into account three factors: the circumstances of each agricultural activity due to the social structure of agricultural communities and the inequalities between richer and poorer regions; the need to act gradually to allow agriculture sufficient time to adjust; and to remember that agriculture was heavily integrated in the wider economy. Article 40 provided for the common organisation of markets and common prices, along with a fund to pay for it. Article 41 allowed for the introduction of additional measures to implement Article 39, such as the co-ordination of vocational education and research, the 'dissemination of agricultural knowledge' and the encouragement of consumption of certain goods. Article 42 allowed the Council of the Community to decide how far the regulations on competition could apply to agriculture. This Article also allowed them to grant aid. During 3–12 July 1958 in Stresa, the Community held an agricultural conference attended by agricultural ministers from member states and the President of the European Commission, Walter Hallstein, along with observers representing agriculture. Three working parties at the conference investigated: the current state of agriculture and the agricultural policies of member states; the short-term effects of the implementation of the Rome Treaty; and the long-term aims of the CAP. In a speech to the conference, Hallstein complained of urbanisation that was leading to rural depopulation and he lamented the 'clash of cultures' in which rural life and rural values were considered inferior. Hallstein also reflected on the Cold War threat from communism: The conference's Final Resolution argued for the vital importance of agriculture in economic and social life and expressed their unanimous wish to preserve the character of European farming, which was predominately based on small-size, family holdings. They agreed that it was necessary to help these farms increase their economic capacity and competitiveness. They also advocated structural changes to rationalise and cheapen production, which was intended to improve productivity. The Resolution also included a commitment to a price policy. Therefore, during 1958–1959, the Commission drafted the CAP and the Assembly commissioned reports into agriculture. The Commission submitted draft proposals in November 1959 (which were debated in the Assembly and by the Economic and Social Committee) and its final report in June 1960. In December the Council agreed to a system of import levies (for grain, sugar, pork, eggs and poultry) and to commodity regimes for agricultural produce. They also introduced the principle of Community Preference in the implementation of the levies and for the negotiation of commercial treaties with outside countries; this ensured that any trade concession granted to an outside country could not weaken the European producer in the Community market.