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It is the oldest common policy in the EU: The Common Agricultural Policy (CAP), which will be discussed in Koblenz this week as part of Germany’s Presidency of the Council of the European Union, has evolved significantly since it was launched in 1962. Back then, it came into effect against the backdrop of supply shortages, volatile food prices and the Cold War.
The beginnings of the CAP
As set out in the Treaties of Rome in 1957, the CAP focused on boosting agricultural production in order to guarantee food supplies at affordable prices in a Europe still impacted by war. Further goals were to secure farmers an adequate income and to stabilize markets.
Multiple instruments were created for this in the 1960s. The six founding states of the European Economic Community (Germany, Belgium, France, Italy, Luxembourg and the Netherlands) eliminated internal tariffs on the most important agricultural products. They levied common tariffs on imports while exports to the rest of the world were subsidized, which kept them competitive. The founding states also introduced a system of “guaranteed prices, which meant that farmers were assured of reliable revenues in any situation and would not be exposed to the global market’s strong price fluctuations. The goal: an assured income for farmers and their families.
With this, Europe succeeded in securing food supplies for its citizens in the 1970s. Prices stabilized and agricultural production and farmers’ incomes grew markedly. But this success was also accompanied by unexpected side effects: overproduction crises, which fed into terms like ”milk lakes“ and ”butter mountains“, as well agriculture’s share of the EU budget growing to 70%.
CAP reformed: Dairy quotas and direct subsidies
EU agriculture ministers have since introduced a series of reforms to stem overproduction and to better incorporate aspects of environmental protection. In 1984 they introduced quotas, particularly for dairy products.
The CAP's reform in 1992 brought about noticeable change: The system of guaranteed prices was gradually replaced by direct subsidies to farmers. A practice of setting aside arable land also came into being.
More protection for the environment and animals
The modernization of the CAP continued with the ”Agenda 2000“ reforms. In the future, the CAP would be based on two pillars: firstly, direct payments to farmers and, secondly, grants for agricultural development. From 2003, support for farmers was based on the size of their farm in hectares.
In 2003, the CAP also strengthened environmental and animal protections. In order to receive the maximum amount available in direct subsidies, each farmer had to fulfil additional obligations, known as cross-compliance rules. On the one hand, these regulations are meant to ensure that land is maintained according to good agricultural and environmental standards. These standards, for example, help reduce erosion and make sure that valuable features of the landscape are preserved. On the other hand, cross-compliance rules also include some basic requirements for agricultural managers – for instance, general responsibilities of animal welfare and food safety.
The reforms of 2014 brought further progress: 30% of direct subsidies are now granted for sustainable land use, or what is known as ”greening“.
What does the future hold for CAP?
Just as in decades past, the CAP must navigate challenges and societal expectations. Among them are issues like environmental protection, climate change, generational change on farms and in businesses, international competition and currently also Brexit. The impacts of the COVID-19 pandemic also present the agricultural sector with major challenges.
In 2018, the European Commission, acting as the ”guardian of the European Treaties“ drafted proposals for the future of CAP after 2020. The basic thinking behind these suggestions is that the European agricultural industry will retain its tried-and-tested two-pillar approach and will position itself in the future more strongly towards sustainability, as well as small and medium sized businesses. Additionally, the new CAP should also motivate younger people to take up a career in agriculture. In the realm of climate and environmental protections, proposals have become more ambitious. For example, the Commission has suggested bringing rules on the environment into the first pillar of CAP, as part of what is known as CAP’s Green Architecture.
The German Council Presidency is also committed to making future agricultural policy crisis-proof and simultaneously more sustainable, thereby securing farmers’ competitiveness. Germany’s Council Presidency is striving to attain political consensus among the member states - known as the General Approach of the Council. Beyond this, Germany wants to progress the biodiversity strategy and the Farm to Fork Strategy (”from stable to table“), which will be presented as part of the European Green Deal.
These strategies will better contribute to a fair, healthy and environmentally friendly food system. The goal is to shorten supply chains, reduce the use of fertilizers, further develop organic agriculture and strengthen animal protections and animal welfare.
The topic of an EU-wide animal welfare label will also be on the agenda of the Informal Meeting of EU Agriculture Ministers.