Common Agricultural Policy

The Common Agricultural Policy (CAP) is the agricultural policy of the European Union. It implements a system of agricultural subsidies and other programmes. It was introduced in 1962 and has undergone several changes since then to reduce the cost (from 71% of the EU budget in 1984 to 39% in 2013) and to also consider rural development in its aims. It has been criticised on the grounds of its cost, and its environmental and humanitarian impacts.

The common agricultural policy was born in the late 1950s and early 1960s when the founding members of the EC had emerged from over a decade of severe food shortages during and after World War II. As part of building a common market, tariffs on agricultural products would have to be removed. However, the political clout of farmers and the sensitivity of the issue made it take many years before the CAP was fully implemented.

The Treaty of Rome, signed in 1957, established the Common Market. It also defined the general objectives of a CAP. The principles of the CAP were set out at the Stresa Conference in July 1958. The creation of a common agricultural policy was proposed in 1960 by the European Commission, and the CAP mechanisms were adopted by the six founding Member States. In 1962, the CAP came into force.

The six member states individually strongly intervened in their agricultural sectors, in particular with regard to what was produced, maintaining prices for goods and how farming was organised. The intervention posed an obstacle to free trade in goods while the rules continued to differ from state to state since freedom of trade would interfere with the intervention policies. Some members, particularly France, and all farming professional organisations wanted to maintain strong state intervention in agriculture. That could not only be achieved unless policies were harmonised and transferred to the European Community level.

By 1962, three major principles had been established to guide the CAP: market unity, community preference and financial solidarity. Since then, the CAP has been a central element in the European institutional system.

The CAP is often explained as the result of a political compromise between France and Germany: German industry would have access to the French market; in exchange, Germany would help pay for France's farmers. Germany is still the largest net contributor into the EU budget. However, as of 2005, France is also a net contributor while the more agriculture-focused Spain, Greece, and Portugal are the biggest beneficiaries.

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