Agriculture has been one of the most important economic sectors in the context of Western European and European Union (EU) politics. In the early years of the post-Second World War and Cold War eras, Western Europe’s priority was to achieve self-sufficiency in food and policy was directed at raising productivity. In more recent years concerns have shifted in the direction of the environment, sustainability, food quality and safety.
The Treaty of Rome (1957) established the Common Agricultural Policy (CAP). The CAP aimed to increase agricultural production, stabilize markets, assure supplies at reasonable prices, and ensure a fair standard of living for those working in agriculture in the European Economic Community (EEC). To meet these goals, the CAP promoted the principles of market unity, community preference and financial solidarity. These meant that there was a single market in agriculture, tariff barriers were established to protect the internal market, and a fund—the European Agricultural Guidance and Guarantee Fund—was established to redistribute agricultural expenditure in the EEC. A key feature of the CAP was that the EEC paid guaranteed prices to producers for agricultural products (cereals, wheat, barley, sugar and bovine meat). These prices were set centrally by agriculture ministers in the Council of the European Union and the EEC was committed to buying up surpluses if prices fell. The CAP accounts for around 50% of the total budget of the European Community.
By the 1970s the guaranteed price system had stimulated agricultural productivity to such an extent that surpluses were being produced. However, there existed strong resistance from member states to reform of the system of fixed prices. Reform of the CAP proved difficult as all of the member states had a vested interest in retaining the policy, decisions in the Council have to be made unanimously, and many member states were influenced by strong farmers’ lobbies. Reform was eventually successful in the early 1990s following pressure from the international community in the General Agreement on Tariffs and Trade Uruguay Round in 1986 to liberalize agricultural trade, and from the environmental lobby to stop over-farming.
By 1992 a CAP reform had been agreed which reduced guaranteed prices and compensated farmers’ loss of incomes through an alternative method of individual direct payments to farmers. Further reform was required to prepare the EU for the accession of new member states from the predominantly rural Central and Eastern European Countries (CEECs). Concerns were raised that transferring the existing level of support to CEECs would increase the CAP budget and place a burden on the net contributor states (e.g. Germany).
The European Commission’s Agenda 2000 programme sought to prepare the CAP for future EU enlargement. Agenda 2000 also sought to broaden agriculture to include social, cultural and environmental aims as well as the traditional concerns of productivity. The 2002 mid-term review of Agenda 2000 proposed a number of reforms to the CAP. The main elements of this reform were: to ‘decouple’ direct payments to farms from production; linking direct payments to goals such as environment, food safety and animal welfare standards; promoting rural development; and cutting intervention prices for some products. A compromise reform was passed on 26 June 2003 in response to strong opposition by France which is a net beneficiary of CAP. The compromise retained some cases of direct payments linked to production. The Commission claimed that the reform marked the ‘beginning of a new era’. It offered more transparency and value for money to consumers and tax payers. It also claimed that the reform removed significant distortions in international trade which harmed developing countries. However, farmers’ lobbies and international organizations representing developing countries strongly criticized the reform.
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