What are the major problems inherent in the Common Agricultural Policy? Assess the extent to which the 2003 reforms have dealt with these problems.

Résumé du document

The Common Agricultural Policy was, together with competition policy, the great early success story of the EU. It is perhaps the aspect of European integration which has most impressed itself on public consciousness. Indeed, the "CAP is one of the most pervasive of all EU policies, one of the most infamous and perhaps one of the most misunderstood" (Robert Ackrill, The Common Agricultural Policy). Established to ensure an adequate food supply for the member states and to protect EU farmers from overseas competition, it is based on the idea of market intervention, a fact which also denotes its role as an exception to the usual market logic of the EU. However, the CAP has become increasingly controversial for a number of reasons.
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Extraits

[...] The major method of maintaining domestic agricultural prices is through price intervention and high external tariffs. The prices are normally set higher than supply, demand and world market prices would dictate, in order to encourage farmers to produce more than they would in a free market (Valerio Lintner, The Common Agricultural Policy). Farmers are guaranteed intervention prices for unlimited quantities of eligible agricultural products. Prices for the product covered by the CAP are set each year following a complex and lengthy series of negotiations between representatives of member states. [...]

[...] Three major principles, defined in 1962, characterise the common agricultural market: unified market in which there is a free flow of agricultural commodities within the EU; -product preference in the internal market over foreign imports through common customs tariffs; -financial solidarity through common financing of agricultural programs. Thus, the first aim was to secure Europe's food supply and to stabilise prices to the benefit of both producers and consumers. In the 1950's food was scarce and expensive, choice and quality were poor. [...]

[...] Compensation payments for price cuts generated by the 1992 reform began in 1994 and were increased for the price cuts of the Agenda 2000 reform (http://www.europa.eu.int). Despite the acknowledged benefits, the CAP has been consistently attacked and inherent problems lead to a new reform in 2003. Why did the CAP need such a reform? The crisis of the European Common Agricultural Policy (CAP) began during the eighties. At that time, the CAP was the victim of its own success. Production had increased considerably, and stocks of commodities were accumulating. Conflicts with the USA over the GATT were increasing, and there were calls for reform. [...]

[...] The CAP is disproportionately favourable to certain areas of the EU, notably France, Spain and Portugal who led the anti-reform camp. These countries receive large amounts of money at the expense of other countries, especially Germany and the UK who were demanding change. In this part, I am going to evaluate the main elements of the 2003 reform on the Common Agricultural Policy.The 2003 reform address to some of these topics, mainly as correction of some internal structural and financial unbalances (surplus production and budget pressure), and adjustment of the obligations promoted by the WTO. [...]

[...] Thus, the continued subsidisation of agriculture makes little contribution to rural employment. However, the orientation given by the new reform to the new member countries seems to push them into the same patterns. It was agreed by EU member states and new member states that 10 new members will receive a rural development package, specifically adapted to their requirements and conditions. This represents the total of 1.5 billions Euro for the period from 2004 to 2006. The financial package will be phased out over next 10 years in different increments each year. [...]