cap for class

8/3/2019 CAP for Class

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T H E C O M M O N A G R I C U L T U R A LP O L I C Y E X P L A I N E D

European CommissionAgriculture and Rural Development


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SI 0,4%NL 6,9%

SE 1,3%

IE 1,9%

ES 12,7%

PL 4,9%

BE 2,2%

DK 2,5%

DE 12,6%

CY 0,2%

FR 20,3%

UK 6,5%

FI 1,3%

IT 14,2%

LV 0,2%

LT 0,5%

HU 2,0%

PT 2,1%

CZ 1,1%

SK 0,5%

AT 1,7%

MT 0,0%

EE 0,2%

EL 3,9%LU 0,1%

T H E F E AT U R ES O F E U R OP E A NA G R I C U L T U R E

Agriculture and orests cover the vast majority

o our territory and play a key role in deter-

mining the health o rural economies as wellas the rural landscape. Agriculture still has

a valuable contribution to make to their sustainable economic

development. Farmers perorm many diferent unctions rang-

ing rom ood and non-ood agricultural products to countryside

management, nature conservation, and tourism. Farming can thus

be described as having multiple unctions.

Europe is both a major exporter and the worlds largest importer

o ood, mainly rom developing countries;

The European arming sector uses sae, clean, environmentally

riendly production methods providing quality products to meet

consumers demands;

The EU arming sector serves rural communities. Its role is notonly to produce ood but also to guarantee the survival o the

countryside as a place to live, work and visit.

Europes agricultural policy is determined at EU level by the gov-

ernments o Member States and operated by the Member States.

It is aimed at supporting armers incomes while also encouraging

them to produce high quality products demanded by the market

and encouraging them to seek new development opportunities,

such as renewable environmentally riendly energy sources.

SHARE (%) IN EU AGRICULTURE (2005)1


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1800

2006

2005

2004

2003

2002

2001

2000

800 1000 1200 16000 200 400 600 1400

Agriculture

Other sectors

T H E FA R M E R S R O L E

Agriculture involves much more than theproduction o crops and animals or oodconsumption. The complexity o their pro

ession requires armers to play many roles.For most armers its a way o lie too.

Farmers primary occupation is ood production. To do this they

employ time-honoured traditions that have been married to mod-

ern science and technology or the purpose o ofering great ood

at an afordable price. This involves using a combination o tradi-tional skills and allied to technical know-how and marketing talent.

Farmers increasingly use inormation technology to aid their pro-

duction and marketing eforts. To those attributes armers must

increasingly add land management and environmental expertise.

In recent years they have been required to include ood saety in a

repertoire that already included animal health and welare skills. It

is doubtul whether any other occupation requires the practitionerto have such a broad range o abilities.

Most arms are small businesses, oten amily-run. They are an

important local employer in many rural regions and major players

in the rural world.

Farmers do not work alone. They are the rst link in the ood chain,

sometimes processing their products on the arm, but more oten

selling them on to others who transorm them into the ood prod-

ucts consumers eventually nd in the shops.

DEVELOPMENT OF AVERAGE GROSS MONTHLY WAGES IN THEECONOMY AND GROSS MONTHLY AGRICULTURAL INCOME

IN AGRICULTURE EU 27

2


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A H I ST O RY O F S U CC E SS F U LC H A N G E

The CAP has always had and continues tohave clear reasons to exist. It has constantly

evolved to refect the changing needs oboth agriculture and society as a whole.

THE ORIGINAL CAP

The CAP has its roots in 1950s western Europe, whose societies

had been damaged by years o war, and where agriculture hadbeen crippled and ood supplies could not be guaranteed. The

emphasis o the early CAP was on encouraging better agricultural

productivity so that consumers had a stable supply o afordable

ood and ensure that the EU had a viable agricultural sector. The

CAP ofered subsidies and systems guaranteeing high prices to

armers, providing incentives or them to produce more. Financial

assistance was provided or the restructuring o arming, or exam-ple by subsidising arm investment in avour o arm growth and

management o technology skills so that they were adapted to the

economic and social conditions at the time. Certain measures were

introduced in the orm o help or early retirement, or proessional

training and in avour o less avoured regions.

The CAP was very successul in meeting its objective o moving

the EU towards sel-suciency rom the 1980s onwards. Suddenly,

however, the EU had to contend with almost permanent surpluses

o the major arm commodities, some o which were exported

(with the help o subsidies), others o which had to be stored or

disposed o within the EU. These measures had a high budgetary

cost, distorted some world markets, did not always serve the best

interests o armers, to the extent that they quickly became un-

popular with consumers and taxpayers. At the same time society

became increasingly concerned about the environmental sustain-

ability o agriculture, with the Rio Earth Summit (1992) being anotable landmark in the early 1990s.

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BE

CZ

DK

DE

EE

ELES

FR

IE

IT

CY

LVLT

LU

HU

MT

NL

AT

PLPT

SI

SK

FI

SE

UK

0,8

1,0

1,2

0,6

1,9

4,72,8

1,7

1,3

1,9

2,5

2,22,9

0,3

2,7

1,3

1,7

1,0

2,51,7

1,8

1,2

0,9

0,4

0,4EU 25 1,3

The CAP had to change and it did!

THE CAP OF TODAY

Many important changes to the CAP were already made in the

1980s but, above all at the beginning o the 1990s. Production lim-its helped reduce surpluses (milk quotas in 1983). A new emphasis

was then placed on environmentally sound arming. Farmers had

to look more to the market place, while receiving direct income

aid, and to respond to the publics changing priorities (MacSharry

reorm o 1992).

This shit o emphasis, which was efected in 1999 (the Agenda

2000 reorm) and which promotes the competitiveness o

European agriculture, also included a major new element a rural

development policy encouraging many rural initiatives while also

helping armers to re-structure their arms, to diversiy and to

improve their product marketing. A ceiling was put on the budget

to reassure taxpayers that CAP costs would not run out o control.Finally, in 2003 a urther undamental reorm was agreed.

Farmers are no longer paid just to produce ood. Todays CAP is

demand driven. It takes consumers and taxpayers concerns ully

into account, while giving EU armers the reedom to produce

what the market needs. In the past, the more armers produced

the more they were subsidised. From now on, the vast majority o

aid to armers is paid independently o how much they produce

Under the new system armers still receive direct income pay-

ments to maintain income stability, but the link to production has

been severed. In addition, armers have to respect environmental,

ood saety, phytosanitary and animal welare standards. Farmers

who ail to do this will ace reductions in their direct payments (acondition known as cross-compliance). Severing the link between

subsidies and production (usually termed decoupling) will enable

EU armers to be more market-orientated. They will be ree to

produce according to what is most protable or them while still

enjoying a required stability o income.

This series o reorms has now painted a clearer uture or the CAP,

making more apparent its value to all o society.

AGRICULTURES SHARE (%)OF GROSS DOMESTIC PRODUCT (GDP) (2005)


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Cereals

Oilseeds

Olive oil

Fresh ruit

Cattle, pigs, sheep

& goats

Eggs & poultry

Other

Fresh vegetables

Potatoes

Wine

Dairy products

6,3% 16,0%

16,4%

2,4%

3,8%

1,8%

16,4%21,4%

5,1%

8,1%

2,2%

MAIN EU AGRICULTURAL PRODUCTS(% share o production by value 2005)

180

160

140

120

100

80

cereals buttersugar bee

2005

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

1983

2002

2003

2004

A R E C O R D T O B E P R O U D O F

Improvements in arm eciency and the incentives oered bythe CAP, led to a major increase in ood production rom the1960s onwards. There were dramatic improvements in produc

tion and selsuciency levels. At the same time arm incomesrose, helped in many cases by growth in the size o arms, assome armers let the industry and arms amalgamated.

WE PRODUCE NEARLY EVERYTHING

Europe can produce nearly all agricultural products. For severalproducts Europe is considered as the world leader, or example in

olive oil, meats, wines, whisky and other spirits. However, the EU is

also a major importer o many diferent types o product.

These natural advantages, together with the CAPs benets, led to

rapid productivity improvements, higher production, ood security

or most products and ultimately, to surpluses o many arm goods.

Surpluses were taken of the market by subsidising product stor-

age (the public intervention system) or by exporting products, withsubsidies, to third countries to avoid a collapse o armgate prices.

During the 1980s and 1990s the EU brought in policy measures to

try to limit production o surplus products. A variety o measureswas used: xed quotas on milk production, with penalties or over-

shoots; limits on the area o crops/numbers o animals or which a

DEVELOPMENT OF SELF-SUFFICIENCY FORCEREALS, SUGAR, BUTTER AND BEEF IN THE EU

%s

el-sufciency


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Mio

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

70000

60000

50000

40000

30000

20000

10000

0

Export o agricul-

tural goods

Budget outlay or

export reunds

00

0tonnes

Marketing Year

FOOD MOUNTAINS NO LONGER EXISTDevelopment o public storage o cereals

(intervention stocks)35,000

30,000

25,000

20,000

15,000

10,000

5,000

0

68/69

70/71

72/73

74/75

76/77

78/79

80/81

82/83

84/85

86/87

88/89

90/91

92/93

94/95

96/97

98/99

00/01

02/03

04/05

MalzeDurum

BarleyRyeWheat

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

1,400

1,200

1,000

800

600

400

200

0

000t

onnes

butter intervention stocks

beef intervention stocks

Development o public storage o bee and butter(intervention stocks)

AIDS FOR EXPORTS GO DOWN BUT VALUEOF EXPORTS KEEPS RISING

armer could claim subsidies; at rst voluntary, then compulsory

set-aside obliging armers to leave a percentage o their land

uncultivated. Gradually these policies succeeded and surpluses

were reduced. CAP reorms implemented in the 1990s, which

served to reduce the gap between EU prices and world prices,

as well as the outcome o the World Trade Organisation (WTO)agricultural agreement o 1995, reduced the usage o export

subsidies (i.e: compensating exporters or exporting products at

world market prices which were lower than EU prices).

As a result o these policy initiatives the EU has managed to

reduce its use o export subsidies while at the same time main-taining and even increasing its agricultural exports in certain

cases. However, the EU remains a net importer o agricultural

products, particularly rom less developed countries.

XISTeals

MalzeDurum

BarleyRye


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The Traditional Speciality Guaranteed (TSG) logo is used or prod-

ucts with distinctive eatures and which either have traditional

ingredients or are made using traditional methods.

The advantages o protecting these quality indications are that

they:

Ofer guarantees or consumers about origin and methods o

production;

Deliver efective marketing messages about high value-added

products;

Underpin rural businesses producing quality products by protect-ing the label against raudulent imitation.

By spring o 2007, the EU had registered nearly 750 geographical

indications, designations o origin and traditional speciality guar-

anteed products. In addition about 2000 geographical indications

or wines and spirits originating in the EU and in third countries

are protected on the EU market.

ORGANIC AGRICULTURE

Organic arming is a production method that maintains soil struc-

ture and ertility, promotes a high standard o animal welare, and

avoids the use o products authorised in conventional agriculture,

such as synthetic pesticides, herbicides, chemical ertilisers, growthpromoters such antibiotics or genetically modied organisms.

Farmers use techniques that help sustain ecosystems and reduce

pollution. Only a very limited number o additives and processing

aids can be used in organic ood processing.

EU rules guarantee the authenticity o organic arming productswherever they are produced and ensure that the labelling o

organic products is accurate. By law the use o the word organic

and its equivalent in other languages on oodstufs is reserved

solely or products o organic arming. This gives guarantees to

consumers about the quality and reliability o the organic produce

they buy.

EU organic agriculture is one o the most dynamic sectors, ac-

counting in 2004 or an estimated 5.8 million hectares (3.5% o

total agricultural area) on 150 000 holdings.

The EU organic logo is available or organic armers and ood

producers to use on a voluntary basis. It signies that:

At least 95% o the products ingredients have been organically

produced;

The product complies with the rules o the ocial

inspection scheme;

The product bears the name o the producer, the

preparer or vendor and the name or code o theinspection body.


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T A K I N G C A R E O F T H EC O U N T R Y S I D E

Rural areas cover 90% o the EU territory,o which more than hal is armed. This act

alone highlights the importance o armingor the EUs natural environment. Farming

and nature exercise a proound infuence over each other.Farming has contributed over the centuries to creating andmaintaining a variety o valuable seminatural habitats. Todaythese shape the many landscapes throughout the EU and are

home to a rich variety o wildlie.

AGRO-ENVIRONMENT MEASURES

Agro-environment schemes have been supported by the EU since

they were introduced in by the CAP reorms o 1992. They encour-

age armers to provide environmental services that go beyond

ollowing good agricultural practice and basic legal standards havebeen consolidated in one specic axis o Rural Development policy

or the period 20072013. Aids may be paid to armers who sign

up voluntarily to agro-environment commitments or a minimum

period o ve years. Longer periods may be set or certain types

o commitment, depending on their environmental efects. It is

obligatory or Member States to ofer such agro-environment

schemes to armers. This illustrates the political priority attached

to these schemes.

A CLEANER ENVIRONMENT

The EU tries to help the environment by:

Ofering nancial assistance to armers who agree to adapt their

agricultural practices, in particular by reducing the number oinputs they use or the number o animals per hectare o land,

leaving eld boundaries uncultivated, creating ponds or other

eatures, or by planting trees and hedges and so going beyond

conventional good arming methods;

Helping with the cost o nature conservation;

Insisting that armers must respect environmental laws (lawson ood saety and public, animal and plant health) and look

ater their land properly i they wish to qualiy or direct income

payments.

GENETICALLY-MODIFIED ORGANISMS AND EU AGRICULTURE

EU legislation on genetically-modied organisms (GMOs) has beenin place since the early 1990s and extended and rened since

then. The EU introduced specic legislation designed to protect its

citizen health and the environment (while also creating a unied

market or biotechnology). There is an approval process based on

a case-by-case assessment o the risks to human health and the

environment beore any GMO or product consisting o or contain-

ing GMOs (such as maize, oilseed rape or micro-organisms) can be

released into the environment or placed on the market.

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N E W M E M B E R S TAT E S , N E WC H A L L E N G E S

Enlargement o the EU to include 10 newMember States Cyprus, the Czech Republic,

Estonia, Hungary, Latvia, Lithuania, Malta,Poland, Slovakia and Slovenia rom 1st May

2004, and Bulgaria and Romania on 1st January 2007, was a historic milestone in the remaking o Europe ater centuries o destructive divisions. Europe as a whole will gain rom an assuredpolitical stability and security, as well as rom the expansion o

the internal EU market rom 380 to nearly 500 million people.

Numerically, enlargements impact on EU agriculture is dramatic.

A urther 7 million armers have been added to the EUs existing

arming population o 6 million o the ormer 15 Member States.

The new 12 Member States add about 55 million hectares o

agricultural land to the 130 million hectares in the old EU o 15,

an increase o 40%, although production in the EU o 27 will onlyexpand by about 1020% or most products. This conrms that the

large agricultural production potential o the new Member States

is still ar rom being used to its ull extent.

Farmers in the new Member States have access to the single

market in the EU and benet rom its relatively stable prices, plus

direct payments (phased in gradually to reach the ull EU level) and

rural development measures.

Despite the progress in modernising and restructuring the agri-

cultural sector which has occurred in the new Member States in

recent years one o the key challenges has been to improve pros-

perity in agriculture and rural communities as a whole. The well-publicised diferences in prosperity between the EU-15 and new

Member States in 2001 45 % o the EU-15 level (GDP per person

adjusted to Purchasing Power Parity) are even more pronounced in

rural areas, because o a combination o lower income and higher

unemployment levels in these areas compared with urban regions

(these disparities are greater in the new Member States than in the

EU-15).

This is a challenge that the EU has already begun to take up, by

creating new rural development measures designed to address the

specic situation o the new Member States.

It is important to point out that the obligations o EU membership

applied immediately to armers in the new Member States. A keyexample is ood saety, which is such an important issue or EU

consumers that no drop in standards at community level could be

considered.

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MAIN EU 25 AGRICULTURAL EXPORTS(% share by value 2005)

MAIN EU 25 AGRICULTURAL IMPORTS(% share by value 2005)

6,0%8,1%

4,8%

3,9%

2,3%

5,5%

3,8%

21,8%3,5%

40,4%

7,7%

17,6%

5,1%

36,5%

7,1%

3,3%

5,6%

5,9%4,9% 6,3%

Meat & edible oal

Oilseeds

Edible ruits

Cofee, tea & spices

Cereals, milling products & starches

Preparations o ruit & vegetables

Fats & oils

Beverages, spirits & vinegar

Cocoa & cocoa preparations

Other

Meat & edible oal

Dairy products

Fresh ruits & vegetables

Preparations o ruit & vegetables

Flowers and plants

Cereals, milling products & starches

Fats & oils

Beverages, spirits & vinegar

Sugar & conectionery

Other


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T H E C A P P RO MO TI N GS U S T A I N A B L E A G R I C U L T U R E I NA G L O B A L E N V I R O N M E N T

The EUs role in agriculture has always been

to help in:

Ensuring a stable supply o afordable and sae ood or its

population;

Providing a reasonable standard o living or EU armers,

while allowing the agriculture sector to modernise and

develop;Enabling that arming could continue in all regions o the EU.

As the CAP has developed, in line with the requirements o EU

citizens, the ollowing actors take on a greater importance:

Improving the quality o Europes ood;

Guaranteeing ood saety;Looking ater the wellbeing o rural society;

Ensuring that the environment is protected or uture

generations;

Providing better animal health and welare conditions;

Doing all this at minimal cost to the EU budget (which is

unded mainly by taxpayers, i.e. ordinary citizens).

The direction o the current CAP reects strategic objectives:

An agriculture that is competitive on world markets, which

respects very strict standards on environment, ood saety, and

animal welare, within a ramework o a sustainable and dynamic

rural economy.

Todays CAP is a policy choice o our society; to continue to

support EU agriculture while responding to the expectations o

citizens, taxpayers and consumers, with the least distortion o

international trade.

During the coming years the CAP will change urther in order tocontinue to:

Be a living policy which reects the needs and expectations o

European society;

Promote a sustainable agriculture ofering sae, quality products

while protecting the environment and animal welare;Support the multiunctional role o armers as suppliers o public

goods to society;

Promote the growth and creation o jobs in rural areas;

Reinorce a competitive and innovative agricultural sector that

can respond to the challenges o the world market;

Be managed by simple and transparent rules.

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E U R O P E A N C O M M I S S I O N

D I R E C T O R A T E - G E N E R A L F O R A G R I C U L T U R E

A N D R U R A L D E V E L O P M E N T

The text o this publication is or inormation purposes onlyand is not legally binding.

For urther inormationRue de la Loi 200, B-1049 Brussels, Belgium

TelephoneDirect line: (+32) 22 95 63 63Exchange: (+32) 22 99 11 11

Fax(+32) 22 99 17 61

Internethttp://ec.europa.eu/agriculture

European Communities, 2007Source o graphs: European Commission and EurostatPrinted in the EUPRINTED ON WHITE CHLORINE-FREE PAPER

KF-77-07-075-EN-D

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