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21.2.2.  CAP reforms

    With most of the major decisions on the common market organisation thus taken, the Commission turned its attention to structures. In December 1968 it submitted to the Council a "Memorandum on the reform of agriculture in the European Economic Community: Agriculture 1980", otherwise known as the Mansholt Plan after the Commissioner who had inspired it. On this basis, the Council, after many "marathon sessions", adopted in April 1972 the Directives of the first reform of the CAP dealing respectively with: the modernisation of farms; measures to encourage the cessation of farming and the reallocation of utilised agricultural area for the purposes of structural improvement and the provision of socio-economic guidance for and the acquisition of occupational skills by persons engaged in agriculture [Directives 72/159, 72/160 and 72/161].

    The other structural measures which were adopted later on covered mountain and hill farming and farming in certain less-favoured areas, the processing and marketing of agricultural produce and producer groups and associations thereof. But other problems also emerged, such as permanent surpluses of the main agricultural products and continuing imbalances in the Community. To face these problems, the second CAP reform recommended by the Commission was approved by the Brussels European Council on February 11-13, 1988, which gave the green light to the "Delors package I". This package covered, in addition to reform of the common agricultural policy, the level of agricultural expenditure, budgetary discipline, the system of own resources and the reform of the Structural Funds, including the EAGGF Guidance section [see section 12.3]. Acting on this European Council agreement, the Council of Ministers adopted the measures necessary for a new reform of the common agricultural policy, in April 1988 [Regulation 1094/88, replaced by Regulation 1257/1999]: market related measures, such as the system of stabilisers (maximum guaranteed quantities) and the co-responsibility levies; and structural measures in favour of afforestation, the diversification of agriculture and incentives for the set-aside of farmland. But since the impact of this set of measures proved to be too small, because technical progress allowed a large increase of agricultural output despite the restrictions, the Commission, in 1991, proposed a much more radical reform of the market mechanisms.

    After several agricultural marathons, the Council, on May 21, 1992, reached a political agreement on the Commission's proposals for the third reform of the CAP. The Council upheld the three guidelines proposed by the Commission: a substantial cut in the target prices of agricultural products in order to make them more competitive on internal and external markets; full and sustained compensation of this drop in farmers' income by compensatory amounts or premiums not linked to the quantities produced; and recourse to measures limiting the use of means of production (set-aside of arable land, withdrawal of part of the land for major crops, limits on livestock numbers per hectare of fodder area). At the same time, the Council decided to increase measures to conserve the environment and landscapes, encourage the early retirement of certain categories of farmers with the transfer of their land to other uses and facilitate the use of farmland for other purposes, such as afforestation or leisure. Through this profound revision of its agricultural legislation, the Community, which is the world's biggest trading entity, has made possible the liberalisation of international trade through the GATT Uruguay Round of negotiations [Regulation 3290/94, see section 23.4].

    However, the third reform of the CAP was not the last. In its outlook document of 15 July 1997 called "Agenda 2000", the Commission considered it necessary to continue the 1992 reform of the CAP and press ahead with the transition to world market prices, particularly through a substantial drop in the common support prices for cereals and beef and veal offset by an increase in income premiums for Community farmers [COM/97/2000]. According to the Commission, this approach was justified for a variety of reasons: the danger of further market imbalances, the prospect of a new round of trade negotiations within the WTO, the desire for a more environment-friendly and quality-oriented agriculture, the prospect of enlargement to the countries of Central and Eastern Europe and, last but not least, the interest of the consumer for lower prices and safer food products.

    The political agreement of the Berlin European Council on the Commission's outlook paper "Agenda 2000", resulted in the fourth reform of the CAP, in March 1999, taking account of the future enlargement of the EU. The reform package included a set of regulations that aimed to develop a more modern and sustainable European agricultural sector, thus ensuring that agriculture can be maintained over the long term at the heart of a living countryside [notably Regulation 1257/1999 and Regulation 1259/1999, replaced by Regulation 73/2009, last amended by Regulation 994/2014].

    The sixth CAP reform, decided in December 2013, sets out the new rules for the CAP in the seven-year period 2014-2020. The most important element of the new CAP is the "greening" payment, which means that 30% of direct income support for farmers will be granted only if they observe certain farming practices that are beneficial for the environment and the climate. The reformed CAP also provides for a more equitable distribution of direct payments envelopes between Member States by progressively reducing the biggest differences in the average level of direct payments received by farmers across the Union [see section 21.5.2].

    Successive reforms have contributed to the competitiveness of European agriculture by reducing price support guarantees and encouraging structural adjustment.

    Established in July 1966, the CAP was, thus, reformed a first time in April 1972, a second time in February 1988, a third time in May 1992, a fourth time in March 1999, a fifth time in September 2003 and a sixth time in December 2013. Six major reforms of a common policy in less than 50 years may indicate that the Member States that conceived it and those that joined them later on have never considered it as perfect; but may also show that they were willing to learn from their experience and able to adapt their common policy to the changing internal and external circumstances.

    After its fifth and sixth reforms, the CAP is targeted not just at agricultural producers but also at the wider rural population, consumers and society as a whole. Thus the new CAP seeks to promote:

    ·         a clear connection between public support and the range of services which society as a whole receives from the farming community;

    ·         a competitive agricultural sector which is capable of exploiting the opportunities existing on world markets without excessive subsidy, while at the same time ensuring a fair standard of living for the agricultural community;

    ·         an agricultural sector that is sustainable in environmental terms, contributing to the preservation of natural resources and the natural and cultural heritage of the countryside;

    ·         the maintenance of vibrant rural communities, capable of generating employment opportunities for the rural population [see section 21.5];

    ·         production methods which are safe and capable of supplying quality products that meet consumer demand and reflect the diversified and rich tradition of European food production.

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