History of the Common Agricultural Policy (CAP)
The basic principles on which the Common Agricultural
policy was built was set out in the Treaty of Rome which
was signed by the 6 original member states of the European
community in 1957.
Article 39 of the Treaty of Rome set out the objectives
of the CAP as follows:
- to increase agricultural
productivity by promoting technical progress and by
ensuring the rational development of agricultural
production and the optimum utilization of the factors
of production, in particular labour;
- thus to ensure a fair standard of
living for the agricultural community, in particular by
increasing the individual earnings of persons engaged
in agriculture;
- to stabilize markets;
- to assure the availability of
supplies;
- to ensure supplies reach
consumers at reasonable prices.
From the mid 1960s and throughout the 1970s financial
assistance was provided for the restructuring of farming:
aiding farm investment, aiming to ensure that farms
developed in size and in management and technology skills
so that they were adapted to the economic and social
climate of the day. Some human and territorial elements
were introduced in the form of assistance towards early
retirement and vocational training and specific support
measures for less favoured areas (LFAs).
By the 1980s, the EU had to contend with almost
permanent surpluses of the major farm commodities, some of
which were exported (with the help of subsidies), others of
which had to be stored or disposed of within the EU. These
measures had a high budgetary cost, distorted some world
markets, did not always serve the best interests of farmers
and became unpopular with consumers and taxpayers.
In 1992 important reforms were agreed which involved
reducing support prices and compensating farmers by paying
them direct aids. Several rural development measures were
introduced, notably to encourage environmentally sound
farming. Production limits helped reduce surpluses. Farmers
had to look more to the market place, while receiving
direct income aid, and to respond to the public's changing
priorities.
This shift of emphasis in the CAP entered a new phase
with agreement in 1999 on the so-called 'Agenda 2000'
reforms. These reforms reinforced the move to make farmers
more reliant on the market and improved incentives to farm
in an environmentally sensitive way. They added a major new
element - a comprehensive rural development policy
encouraging many rural initiatives while also helping
farmers to diversify, to improve their product marketing
and to otherwise restructure their businesses. The budget
available to the CAP was set out for the period 2000 to
2006, thus allowing farmers to plan ahead with more
certainty. The budget was also capped to reassure taxpayers
that CAP costs would not escalate.