The EU’s common agricultural policy, or 'CAP' as it's known, aims to support farmers
and improve agricultural productivity, ensuring a stable supply of affordable food and that
the EU's farmers are able to make a reasonable living while also safeguarding the environment.
Today, we're here to take a closer look at the mystery that is the CAP and a few of the
common issues people raise about this policy. Time to put my thinking cap on
There is a lot of debate surrounding the cost of the CAP – is it working at full CAP-acity
or does it need deCAPitating?
While it's true that agricultural spending
is the largest individual part of the EU’s total expenditure, this is because agricultural
policy is handled by the EU directly, unlike sectors such as transport or education, meaning
all funding for agriculture comes from the EU budget.
So that's all very well and good, but you might be asking - what does this mean for
the European taxpayer?
Well, according to the EU Commission, this currently works out at around 30 cents per
citizen per day, or just over a 100 euros a year.
Is that too much? I mean, how long is a piece of string? It's difficult to say – but what
I can say is that overall CAP expenditure as a % of the EU budget has been steadily
declining over the years.
Whereas the CAP represented a whopping 66% of the budget in the early 1980s, it now stands
at 34.5% (or around 58 billion euros) of the 2020 EU budget.
It's a fair point – many sectors struggle in the EU from time to time, the question
is why subsidise agriculture specifically?
Well, the logic behind the idea that farmers should get an extra helping hand is mainly
due to the fact that farming is unlike other businesses because it has to work within the
constraints imposed by nature, meaning that farmers only have a limited amount of control
over how much is grown in any given year.
Another reason for lending support to farmers is because agricultural products take time
to grow, meaning the response to increased or decreased demand can take a number of years.
For example, farmers engaging in agroforestry, i.e. including trees on their farms to add
another crop while also improving biodiversity and soil health is really something
that should be encouraged, but these can take many years to grow before they can produce
a profitable crop.
Farmers are also particularly vulnerable to market volatility and fluctuations in prices,
so it's not possible for farmers to behave like the owners of businesses in other sectors.
Last, but by no means least, there are also a number of positive externalities of farming
that should be recognised - if farmers go out of business, rural communities will suffer
and this could have consequences for both the environment and for tourism.
There is actually a publicly accessible database of all CAP funding recipients, so by all means
feel free to go check it out. Don't say I never give you anything.
However, it is true that this data is only available for two years after the payment
has been made, after which time it's deleted, so you better get cracking.
So the CAP does not favour a specific farming method per se, and nowadays the vast majority
of financial support is decoupled from production. What does this mean? Well, this means that
a payment per hectare is typically the same regardless of how intensively it is farmed.
What's more, the way farmers receive EU support now means that they are obliged to adopt certain
sustainable farming practices.
That being said, the way the direct payments are shelled out does mean that the bulk of
the CAP Direct Payments goes to a limited number of farmers.
Payments are calculated by reference to the area farmed. And in practice, this means that
an estimated 20% of the beneficiaries of CAP subsidies are receiving 80% of the funds,
and there have been many criticisms that small farmers struggle to get their fair slice of
the pie.
However, the EU Commission maintains that, despite this, more than half of the beneficiaries
of income support have small farms and that, across the EU, the majority of the payments
go to medium-sized professional family farms, rather than industrialised agricultural companies.
It's true that significant differences exist in the level of income support per hectare
across the EU. This is mainly the result of using historical references to apportion payments.
Since the last reform of the CAP, this has been acknowledged and direct income support
is in the process of being progressively adjusted so that it is more equitably distributed between
EU Member States. This process is known as “convergence”.
However, this is made trickier by the fact that substantial differences exist between
Member States in terms of economic factors such as wage and input costs, so these also
need to be taken into account and payments distributed accordingly.
That’s enough yapping about the CAP for now, but be sure to keep up with the EURACTIV
team where we’ll map out all the latest developments on agricultural policy.