The Common Agricultural Policy (CAP) was born in 1962 as a product of Europe recovering from war. Food scarcity was still an issue in many parts of the original six members that founded the European Economic Community (EEC) in 1957. Following on from European co-operation on coal and steel initiated in the 1950s, the CAP quickly became the leading common policy among member states. It was established with the twin objectives of food at affordable prices and a fair standard of living for farmers.

Both objectives were delivered in the first decade of the policy. Ireland, Denmark and the UK extended the EEC to nine members in 1973 as farms were becoming more productive. With investment, oversupply became an issue and ‘food mountains’ was common language in the late 1970s and 1980s.

Being the only real common policy, the CAP captured as much as 72% of the entire EEC budget in 1984. Its share has been in decline since then, as the membership expanded and the EU became a complete single-market. Agriculture is no longer the EU’s one common policy, as it was at the outset of European integration in the early 1960s.

CAP evolution

There have been four distinct phases of CAP, beginning with market support in various guises. This era lasted for three decades until 1992. It began with food scarcity, later moving to a phase of quota-controlled production in dairy and a limit on intervention purchasing of farm produce with European funds.

The first major reform took place in 1992 under then Agriculture Commissioner Ray McSharry. It involved a phasing-out of market support and a move to direct payments for farmers. At the outset, this was unpopular with farmers, but in time they embraced the new structure. Market support was confined to provision of export subsidies on commodities sold in lower-value markets outside the EU.

The second major evolution took place just a decade later under Franz Fischler, a two-term commissioner from Austria. This involved a decoupling of farm payments from production and the beginning of movement towards an area-based system. Market support was also withdrawn, with the EU ceasing the payment of export refunds. This policy had its attraction to extensive farming systems as there was no incentive for active farming beyond keeping the land in good agricultural condition.

The current CAP policy, which has been in place since 2014, is essentially an evolution of this. There has been an attempt to define active farmers, but the trend is towards a complete area-based payment system by the end of the current budget cycle.

It is likely that the direction for the next reform will see further focus on environmental policies and measures that address climate change.

Read more

Pillars and payments: how the current CAP works