Common Agricultural Policy

(CAP)

   The CAP is a system of European Union (EU) agricultural subsidies. Its origins are to be found in an agreement made between France and West Germany during the drafting of the Treaty of Rome which provided for guaranteed markets for French agricultural products as a quid pro quo for wider markets for German manufactured goods. Formalised in 1962, the CAP was devised at a time when there were still memories of wartime food shortages, hence the emphasis upon encouraging agricultural productivity. However, 20 years later, increased efficiency, in part brought about by technical progress, led to the creation of huge, unsaleable surpluses (the much-derided ‘wine lakes’ and ‘butter mountains’), which had to be placed in storage and often sold off cheaply to countries such as the old Soviet Union. Subsequent reforms of the increasingly costly CAP were concerned to cut production by means of set-aside schemes, reductions in guaranteed prices and a general move away from subsidising production towards instead making direct payments to farmers in need of financial assistance and a greater emphasis on land stewardship. As a result of such moves, EU spending on agriculture has been reduced to around 44 per cent of overall expenditure. The CAP was never popular in Britain, being seen as costly, wasteful and inefficient. Britain has a much smaller agrarian sector than many European countries, so that it does not benefit from high agricultural spending.