Enjeux - Do we really need the CAP ?

Do we really need the CAP ?

Highly dependent on imports to feed its population after World War Two, Europe set up an unprecedented system to ensure the supply of agricultural foodstuffs: the Common Agricultural Policy, or CAP. The CAP proved more than efficient, with Europe 20 years later becoming self-sufficient in dairy products, meat and grain. So efficient, in fact, that by the 1980s European farming was producing enormous surpluses. Despite several radical reforms, the CAP today is heavily criticised. With divergent opinion within the European Union on the role of European agriculture – on strategy, exports, the use of food as a weapon, town and country planning and social issues – the policy is also the target of WTO negotiations and is often used as a bargaining chip for liberalising other sectors of world trade.
Have we too hastily forgotten the advantages of the CAP? Should we change its mechanisms? Do the changes under way go too far? Let’s take a look at this complex system, one that for a very long time was one of Europe’s only real policies.

THE IDEA

Birth of the CAP

European countries from the late 19th century on depended heavily on farmers from other continents, and their colonies in particular, for agricultural produce. This was even the case for France, which had the most farm land of any country in Europe. Having suffered from food shortages during World War Two, Europe realised how vulnerable it was in this respect and took the strategic role of agriculture fully on board in the 1950s. This realisation led to the birth of the Common Agricultural Policy, one of the pillars of the Treaty of Rome, signed in 1957 to officialise the creation of the Common Market. Dutchman Sicco Mansholt and Frenchman Edgar Pisani orchestrated the implementation of the CAP in 1962. 
At the time, the three main objectives of the policy were to:

• ensure peace in Europe through self sufficiency in food,
• enable all Europeans to eat quality foodstuffs at an affordable price and in adequate quantities,
• guarantee the long-term future of agriculture through modernisation and by bringing farmers a decent income.

Four mechanisms of regulation

To meet these objectives, the CAP was backed up with a number of tools. The main initiative was the creation of Common Market Organisations (OCMs), product by product, including for wine, cereals and milk. Each OCM established rules for regulating production in line with demand. The mechanisms were essentially based on:

• an intervention price: regardless of global market conditions, European farmers would be ensured a guaranteed price for their product;
• internal market support: to limit any fall in prices inside the Common Market, intervention bodies would buy a part of the production when prices began to drop;
• export refunds: financial aid for exporters, offsetting the difference in internal market and world market prices ;
• import levies: resembling import taxes, these levies covered the difference between the third country price and the inter-community price. They have since been replaced by fixed import duties. 

Objectives met rapidly

The policy achieved spectacular results. In ten years the European Community went from deficit to self sufficiency and then, in the 1970s, to surpluses for certain products, with powdered milk and butter mountains and silos overflowing with cereals. Europe was forced to launch agricultural policy reforms, which continued through 2009. These reforms were also spurred by pressure from the General Agreement on Tariffs and Trade (GATT), which in 1994 became the World Trade Organization (WTO), and often resembled measures adopted, several years afterwards, by the USA.

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