Agricultural Policy and Policy Processes Slides to support Chapter 20 of The Government and Politics of the European Union, 7th ed., by Neill Nugent

CAP in context Why does agriculture loom so large in the life of the EU? (After all, it only accounts for 1.2% of GDP and 5% of employment) 1. Lots of other industries (agro-chemicals, food processing, etc.) are dependent on agriculture’s success. 2. Agriculture is the most integrated of the EU’s sectoral policies. 3. It accounts for two-fifths of the EU’s budgetary expenditure. 4. There is greater institutional presence in the agricultural field at EU level than in any other. 5. Agriculture is the most controversial of the EU’s policies.

Why does CAP loom so large? 1)The distinctive nature of agriculture Agricultural prices are subject to considerable fluctuation, because supply is heavily weather-dependent. If they go too high, inflation follows in the rest of the economy. Too low, and farmers are forced off the land. Reliance on imports creates a vulnerability to outside pressures, and can damage the balance of payments. Unmanaged land often reverts to scrub, inimical to biodiversity. Agriculture is intrinsically linked to health and safety.

Why does CAP loom so large? 2)Political factors The governments that benefit most from CAP (including France, Germany and Ireland historically) are staunch defenders of it. The ‘distinctive’ nature of agriculture has made it more difficult for ‘outside’ decision-makers to challenge what is presented to them. The agricultural vote is significant, and in some states disproportionately titled towards smaller parties which, in PR systems, can be key players. Farmers usually have strong organizations representing their interests.

Why does CAP loom so large? 3) The agricultural lobby The size of the lobby, at national and EU level, is formidable. The lobby has close contacts with national governments and with the Commission. ‘Natural opponents’ – consumer and environmental groups – are relatively weak, because they don’t constitute an identifiable sectoral interest, and they don’t enjoy ‘insider status’. The lobby was until the 1980s relatively united (but EU enlargement and pressures to reduce CAP expenditure have worked to diverge interests somewhat).

Changes to CAP in the 1990s and 2000s The EC/EU used to guarantee high price levels for agricultural products, but this was expensive due to: Products being produced in surplus EU agricultural prices were consistently above world prices Guaranteed prices have now been reduced to safety-net levels. Price level supports have been largely replaced by incomes support payments. Higher priority is given to ‘newer’ policy concerns such as rural development, environmental protection and food safety.

Community preference Protectionist measures apply to most agricultural imports into the EU, although the EU grants ‘generalized preferences’ to over 120 developing countries. Virtually all imports from Africa, the Pacific and the Caribbean are allowed free access Community preference system has been much reduced since the 1990s, in response to GATT/WTO pressures

Impact and effects of the CAP Agricultural efficiency has increased enormously, but a good deal of this can be attributed to improvement in technology and rationalization. Agricultural incomes have grown roughly in parallel with growth in incomes in other sectors. Markets are much more stable. The EU is self-sufficient in virtually all the foodstuffs its climate allows it to cultivate; surpluses still exist in many product sectors But: - intensive farming practices have damaged the environment; - the release onto the world market of heavily subsidized EU goods has distorted the international division of labour and the rational utilization of resources, and has been particularly damaging for the economies of developing countries.

Policy processes Whereas the Commission’s policy role is often concerned with creating a policy framework, with respect to agriculture the stress is on improving the efficiency of the one that already exists. The Council of Ministers has historically not driven reform of CAP, being status quo minded Until the Lisbon Treaty came into force, the EP’s powers over agriculture were limited. Now, its budgetary powers over agricultural expenditure have increased, and the EP has gained co-equal powers with the Council over the making of agricultural legislation

Management and implementation of CAP As with most policy areas, the day-to day implementation of the CAP is undertaken mainly by national agencies. The Commission’s job is to oversee the work undertaken by the national agencies and to deal with such technical matters as the authorization of products, ensuring preventative and control measures to do with disease are in place, adjusting import levies, and granting export licences. These decisions can have important financial implications for producers, traders, processors and the EU budget.