The CAP (Common Agricultural Policy): A Short History of Crises and Major Transformations of European Agriculture

Abstract

AbstractThe purpose of this article is to study the development of EU agricultural policies from a historical reconstruction perspective. The 1957 Treaty of Rome, the basis of today’s European Union, gave birth to the Common Agricultural Policy (CAP) in order to coordinate production across different European countries, to ensure food self-sufficiency and the certainty of supply to member states. Over time, several choices, as well as certain subsidies and policies (e.g. milk quotas) have been called into question as part of the liberalisation of the common agricultural market. Others persist, but continue to favour the unequal management of funds in favour of large companies specialised in intensive agriculture and livestock farming. These choices represent a loss in terms of both biodiversity and traditional farming knowledge and know-how. The decisive changes of the CAP at the institutional level have transformed the socio-economic as well as geographical landscape of Europe. It should be added that with the current crises—the COVID-19 pandemic, the war in Ukraine, and the ecological crises—the entire model is being called into question. Consequently, this article, after providing a brief overview, aims to reconstruct the common agricultural policies. It then provides an explanatory framework in quantitative terms of the French and Italian agricultural sectors to highlight what are, in the authors’ opinion, the limits of the CAP, even in the face of the crises mentioned above.KEYWORDS: : : Agricultural economycommon agricultural policyFranceItalyCAP reformsJEL CODES: : : Q17Q18Q57 Notes1 In the case of France, this structure can be considered as much the long-term effect of Jacobin revolutionary ideology as the result of certain precise legislative choices made during the ‘Glorious Thirties’; in the case of Italy, on the other hand, it is the outcome of the agrarian reform of 1950.2 Here, in the wake of van der Ploeg (Citation2018), we consider the modernisation of agriculture to be closely linked to its industrialisation, and thus to the accumulation of capital in the sector.3 Treaty establishing the European Economic Community and annexed documents. Article 39, 1st line.4 The project is called the ‘Green Bible’ or ‘First Mansholt Plan’ (Sotte, Citation2023, pp. 19–20).5 Technically, one of the choices implemented to control the price of goods, in the case of perishable and difficult to store agricultural products (e.g. citrus fruits) is their destruction. When destruction is not possible, the Commission intervenes by transforming the goods, as in the case of milk that becomes milk powder. When the market price returns above the guaranteed minimum price, the products are put back on the market. The CAP also finances the transformation of surpluses into products to be used in other markets, such as the transformation of milk into cheese. That was at least until 2005.6 The ‘guidance section’ never exceeds 10% of the EAGGF budget, which is largely used for expensive storage and export subsidy policies and direct aid to producers.7 The agricultural sector contributes greatly to the ongoing environmental crisis. It consumes 70% of the world’s freshwater withdrawals (The World Bank, 2022) and is the largest emitter of greenhouse gases, accounting for 26% of the world total (European Court of Auditors, Citation2021).8 Mansholt’s political path is interesting in this regard: remembered for having contributed to the development of the industrialisation of agriculture at the expense of ‘traditional or family farming’, he then shifted to positions that were less and less productivist and more and more eco-sustainable.9 Introduced by EEC Regulation 856/1984 of 31 March 1984, as of 1 April 2015, the milk quota policy ended and regulation was left to free market forces.10 The Uruguay Round was the last and most important round of international negotiations held between 1986 and 1994 under the General Agreement on Tariffs and Trade (GATT), a set of rules and agreements aimed at trade liberalisation. The Uruguay Round led to the Marrakech Agreement in 1994, and the establishment of the World Trade Organisation (WTO) in 1995. For a reconstruction of this path see: Legras (Citation1993, pp. 325–331).11 LEADER derives from the French phrase ‘Liaison Entre Actions de Développement de l’Économie Rurale’ which means, ‘Links between activities for the development of rural economy’. The LEADER programme makes use of Local Action Groups (LAGs) and brings together the various public, private and civil society actors in a specific area. In the context of rural development, LEADER is implemented through national and regional Rural Development Programmes (RDPs) of each EU Member State. These are co-financed by the European Agricultural Fund for Rural Development (EAFRD). For the 2014–2020 7-year period, the LEADER method was extended under the broader term Community-Led Local Development (CLLD): see: European Commission (n.d.a).12 The MacSharry Reform to make these choices politically acceptable started to make direct payments to farmers, called ‘deficiency payments’ because they were seen as compensation for cuts in the ‘guaranteed prices’ of agricultural products.13 This was contested by farmers’ associations, which considered it to be mere welfarism. Moreover, the 20% of farmers with the largest holdings received 80% of the payments. Several instruments have been put in place to avoid these distortions but they have not had the desired effect (see Frascarelli, Citation2019).14 See European Council (Citation2019).15 Aware of the fact that the CAP has undergone many reforms over time, in this text we have limited ourselves to dealing with those which, in our opinion, have had the greatest impact. Not only on the agricultural sector, but also in moving the CAP from its original protectionist and dirigiste structure to a more marked-oriented one.16 For a careful reconstruction see Farolfi and Fornasari (Citation2011, pp. 55–60).17 Source: AGRESTE and ISTAT.18 In 2020, 96% of agricultural enterprises in Italy were individual or family farms, while in France such enterprises accounted for about 64% of the total (EUROSTAT, Citation2022a).19 The agricultural and agri-food sector is one of France’s key export sectors. At EUR 5.69 billion, it is the third largest source of the country’s trade surplus after aeronautics and chemicals, perfumes, cosmetics (see Deroyon & Urvoy de Portzamparc, Citation2022).20 See Onorati and Conti (Citation2016).21 The AAIN was established by the European Commission in 1965 to estimate the income of farms. We have taken the FADN data into account, considering the differences that exist according to the specialisation of the enterprises and bearing in mind the randomness of farm incomes, especially due to climatic conditions.22 Since we are talking about international public opinion, let us remember that public opinion is normally shaped by newspapers, whether paper or digital, as well as news websites. Among the latter we can mention, as an example among many: Euarctiv (2016); among the former, as an example among many in Italian, see: Gaita (Citation2022).23 In 2020, France received EUR 6.909 billion in direct aid, of which EUR 550.551 billion for market measures and EUR 1.987 billion for rural development. Italy got EUR 3.599 billion for direct aid, EUR 677.514 million for market measures and EUR 1.501 billion for rural development. Total CAP expenditure amounted to EUR 54.674 billion. Source: European Commission (Citation2021).