Common Agricultural Policy

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Common Agricultural Policy (CAP)

in the law of the European Union, one of the very foundations, being the legal regime supporting the coordination of agriculture in Europe. Although included in the Common Market, it was necessary to make special provision for agriculture because of the contradictory nature of the policies of some founding member states, made none the easier by the accession of others. The essence of it is that the market is unified, allowing free movement of goods throughout the Community.

There is a Community preference protecting the market against imports from outside and the CAP is to be financially secure: the European Agricultural Guidance and Guarantee Fund was set up to this end. Market organizations have been set up for most products, which have the effect of stopping member states from setting up competing systems. The principal effect of the CAP differs in relation to different products: wheat and related produce are protected by intervention purchases made to support producers; beef and related produce are supported by excluding outside competition; and fruit and vegetables and wine are controlled by quality.

The intervention price is set as that at which the national authorities must buy certain crops - some farmers may be tempted to grow crops for the intervention price rather than any real market. The more member states become involved in the Union, the more interested they become in reforming the CAP rather than using it as an excuse for complaining. The target price is part of the cereal market scheme. It is the price at which it is expected that sales can be made in the next year in the Union. It is not a fixed price. It is established annually by the Council with a qualified majority on a proposal from the Commission after consulting the Parliament.

The threshold price is the price fixed for certain imports from outside countries. It protects Union farmers from outside cheap competition. It is fixed by taking the cost of imports and making sure that it does not exceed the set internal target price. Reforms introduced in 1999 emphasize food safety, environmental objectives and sustainable agriculture. These objectives, which fall outside the scope of market policy, now, with rural development, have become the second pillar of CAP. The reforms in 2003 consist of simplification of market support measures and direct aid by decoupling direct payments to farmers (the aid which they receive is not tied to production); reinforcing rural development by transferring market support funds to rural development through modulation (reductions in direct payments to large farms); a financial discipline mechanism (ceiling placed on market support expenditure and direct aid between 2007 and 2013). In 2004, a second set of initiatives was introduced including: reform of aid to Mediterranean products (tobacco, hops, cotton and olive oil) and a proposal for the reform of the common organization on the market in sugar.