The Common Agricultural Policy

The Common Agricultural Policy (CAP) was established in 1957 by the Treaty of Rome. It provides a framework under which farmers in the European Union operate. It comprises of a number of policies relating to farming, the environment, rural development and agricultural markets. It can broadly be divided into the following 3 areas:

  • direct payments to farmers;
  • market management measures;
  • rural development.

What is the purpose of the Common Agricultural Policy?

The original objectives of the Common Agricultural Policy are set out at Article 39 of the Treaty of Rome as follows:

  • “to increase agricultural productivity by promoting technical progress and by ensuring the rational development of agricultural production and the optimum utilisation of the factors of production, in particular labour”;
  • “thus to ensure a fair standard of living for the agricultural community, in particular by increasing the individual earnings of persons engaged in agriculture”;
  • “to stabilise markets”;
  • “to assure the availability of supplies”;
  • “to ensure that supplies reach consumers at reasonable prices”.

The objectives have been extended since then so as to include the protection of the environment.

Direct payments to farmers

This is a system which provides subsidies direct to farmers in European Union Member States.

Market management measures

There are a number of measures which control the import and export of agricultural goods from and to the European Union including export subsidies. These include:

  • import levies on certain goods imported into the European Union, the purpose of which is to ensure that farmers in the European Union can trade competitively;
  • import quotas, the purpose of which is to restrict the amount of food being imported into the European Union;
  • the setting of internal intervention prices, in order to ensure that farmers in the European Union can trade competitively.

Rural development

There are a number of rural development measures, the purpose of which is to improve the competitiveness of the farm and forestry sector, to improve the environment and countryside and tackle climate change and to improve the quality of life and encourage economic diversification for rural communities.