CAP stands for ‘common agricultural policy’ and denotes the system of agricultural provisions in the EU.
The common agricultural policy consists of the rules and mechanisms which regulate the production, sale and processing of agricultural products in the EU. Agricultural policy has been one of the key policies of the EU since the establishment of the European Economic Community in 1958.
The main principles of the EU's agricultural policy can be summed up as follows:
• A single market, which means that it must be possible to exchange agricultural products between the EU countries freely and without barriers.
• Community preference, according to which agricultural products produced in the EU take precedence over products imported into the EU from third countries and according to which the EU's agricultural products must be protected from fluctuations on the world market and products imported at low prices from third countries.
• Financial solidarity, which means that all expenditure on the common agricultural policy must be financed via the EU budget.
In order to achieve the aims of the common agricultural policy (see box), common organisations of markets for agricultural products must be set up which, depending on the type of product, may take one of the forms listed below:
- common rules of competition
- compulsory coordination of the various national market organisations
- a European market organisation.
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The basis for the CAP is to be found in Articles 32-38 of the EC Treaty. The objectives of the common agricultural policy are presented in Article 33(1) of the EC Treaty:
1. The objectives of the common agricultural policy shall be: |
From 1962 market organisations were introduced for a number of products. Market organisations were first introduced for grain and subsequently for pigmeat, fruit and vegetables, and there are now market organisations for most of the EU’s agricultural products. The basic principle of market organisations is that prices of agricultural products in the EU should be kept at a stable level on the basis of politically determined prices. The market organisations are intended to remove barriers to trade in agricultural products between EU countries. At the same time the organisations have to protect the agricultural products of the EU countries against products from countries outside the EU by way of a common customs barrier.
The EU’s agricultural policy is financed via the European Agricultural Guidance and Guarantee Fund (EAGGF), which accounts for a significant part of the EU’s budget. The EAGGF was set up in 1962 and was divided into two sections in 1964:
1. The guidance section is a structural fund whose aim is to promote regional development and reduce disparities between different regions in the EU. The guidance section contributes to structural reforms in agriculture and the development of rural areas (e.g. by investment in new equipment and new technology).
2. The guarantee section is the most important of the two sections, since it finances expenditure on the market organisations. This is done, amongst other things, by way of export refunds to third countries in order to promote agricultural exports or by intervention to regulate agricultural markets. This means the purchase or storage of surplus production. Expenditure on the guarantee section is compulsory expenditure in the EU budget.
Although the EU’s agricultural policy can be said in many ways to have contributed to improving agricultural production and productivity in the EU and to stabilising markets, guaranteeing supply and protecting the EU’s farmers against fluctuations on world markets, it has also had unwanted side effects and problems. In some periods supply and demand have not been in balance and the EU’s farmers have produced more than the market could absorb, resulting in large surpluses and soaring expenditure on agriculture. The common agricultural policy has therefore undergone several reforms, of which the latest was adopted in outline in June 2003.
Reform of the agricultural policy has been a fairly constant subject of discussion since the 1960s. The latest reform has to be seen in close connection with the enlargement of the EU, since expenditure on the agricultural policy would rise substantially if the new Member States were to benefit from the agricultural support system as it stood at the time of the negotiations on the countries’ accession. In connection with the accession of the ten new EU Member States, a ceiling was set on expenditure for agriculture up to 2013.
At the European Council meeting on 24-25 October 2002, it was decided that annual expenditure on the agricultural policy must not exceed the expenditure for 2006 (agreed in Berlin in 1999) increased by 1% per year over the period 2007-2013. The reform of the agricultural policy of June 2003 would be kept within this framework.
| The original EEC Treaty staked out the general objectives of the common agricultural policy and the principles for it were laid down at a conference in Stresa (Italy) in July 1958. The mechanisms for the common agricultural policy were then adopted by the six original Member States in 1960 and, in 1962, the Council adopted the first regulations on the common agricultural policy with a view to establishing an internal market for agricultural products and financial solidarity by way of a European Agricultural Guidance and Guarantee Fund (EAGGF). |
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After difficult negotiations the Council finally adopted a reform of the EU agricultural policy by a qualified majority (Portugal was not able to subscribe to the agreement) on 26 June 2003. The various parts of the reform come into force during the course of 2004 and 2005. One of the central elements in the reform is the phasing out of the bulk of direct support, so that support payments are no longer dependent on the volume of the production in question. The aim is to get European farmers to produce the products which the market requires and not to gear their production to the support available for it. In order to prevent production being abandoned entirely, the Member States may choose to retain a linkage between support and production on clearly defined conditions and within clearly delimited areas. This payment is linked to the observance of standards on the environment, food safety, animal and plant health and animal welfare and to the requirement that all agricultural land be maintained in a good agricultural and environmental state. (cross-compliance). |
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On May 20 2008 the European Commission presented its proposal for the "Health Check" of the CAP reform. The health check is not a reform of the CAP but rather an adjustment. The Commission proposes to:
In the agreement on the reform of the CAP from 2003 was a revision clause saying that the Commission should make a proposal for a health check of the CAP, which the Commission has now done after a period of consultation. Further Information: |
Further information:
Link to Directorate-General for Agriculture and Rual Development
Link to summery of Agriculture legislation
Sidst opdateret: 22-07-2008 - ANSJ