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Lesson 6: The Common Agricultural Policy

Author: Carlos San Juan Mesonada

Friday 8 September 2017, by Carlos San Juan


Common Agricultural Policy and reforms

i) Reading:

The changing nature of agricultural and rural expenditure Author: Albert Massot, European Parliament.

ii) Reading:

The draft 2015 CAP budget. Alan Matthews, 2014


The changing nature of agricultural and rural expenditure

Author: Albert Massot, European Parliament. 2014

A.General overview

The share of the European Union budget accounted for by agricultural spending has been steadily declining in recent years. Whereas the CAP represented 66% of the Community budget in the early 1980s, it accounts for just 37.8% of it in 2014-2020 (5.2.10, table I, line D)

Since 1992, the date of the first significant overhaul of the CAP and the explosion in the volume of direct aid, agricultural expenditure has remained stable in real terms, other than in 1996 and 1997 (as a result of the BSE crisis and the accession of three new Member States). Between 1990 and 2020, therefore, the budgetary cost of the CAP, when set against EU gross national income (GNI), will have decreased from 0.54% to an expected 0.34% (5.2.10, table I, line D)

B.Allocation by expenditure category and by sector

91% of expenditure under the first pillar (EUR 44.3 billion in 2012) (5.2.10, table V, column 1) consists of direct aid to farmers (EUR 40.8 billion). The sharp increase in direct aid since 1992 has resulted in a corresponding fall in other EAGGF Guarantee Section/EAGF expenditure: export subsidies account for just 0.3% (EUR 146.79 million) of the total budget and the cost of other intervention measures (storage, measures to restructure the sugar industry, promotion and information actions, and veterinary and phytosanitary measures) amounts to just EUR 3.8 billion (8.5% of the total).

The three sectors which used to receive most funding under the EAGGF Guarantee Section were arable crops (cereals, oilseeds, and protein crops), beef, and milk products. After the 2003 reform (5.2.3 and 5.2.5) and the resulting decoupling of aid from production, the top expenditure item was payments to farms (82.5% of the EAGF total in 2012), followed by direct aid linked to production (8.6%) (5.2.4).

C.Distribution by country and by type of farm

As shown in Table V, column 1, relating to the financial year 2012 (5.2.10), the largest EAGF recipient is France (16.8%), followed by Spain (12.1%), Germany (11.6%), and Italy (10.6%). As far as the EAFRD is concerned, however, Poland is the top recipient (12.8%), followed by Germany (9.7%), Spain (9.7%), and Romania (9.3%). It should be noted that new Member States (EU-12) have had little influence on the EAGF (16.3%), given that direct payments are gradually being aligned. However, they are already receiving a significant share of EAFRD funding (37.9%), in accordance with the priority being given to the modernisation of their agricultural facilities and the development of their rural areas.

Table V, column 2 (5.2.10) also illustrates the uneven distribution of CAP direct aid at farm level: 79.73% of CAP beneficiaries in the EU-27 received less than EUR 5 000 in annual payments in 2012, giving an aggregate amount equivalent to 15.5% of the total direct aid paid out under the EAGF.

By contrast, a very small percentage of farms (126 460 out of a total of 7.5 million, i.e. 1.68%) each receive more than EUR 50 000, giving an aggregate amount equivalent to EUR 12.87 billion (31.48% of the total direct aid paid out in 2012). Countries with a higher percentage of large farms (or firms) which receive money under the CAP are Denmark, France, the Czech Republic, the United Kingdom and Slovakia. This state of affairs obviously calls into question the legitimacy of CAP aid when set against the values espoused by European society as a whole.

ii) Reading:

The draft 2015 CAP budget. Alan Matthews, 2014

Attached documents


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