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Common agricultural policy (CAP)

The common agricultural policy is an area in which competence is shared between the European Union (EU) and the Member States. Under Article 39 of the Treaty on the Functioning of the EU, its aims are to ensure reasonable prices for Europe's consumers and fair incomes for farmers, in particular through the common organisation of agricultural markets and by ensuring compliance with the principles adopted at the Stresa Conference in 1958, namely single prices, financial solidarity and Community preference.

The CAP is one of the most important EU policies (agricultural expenditure accounts for some 45% of the Community budget). Policy is decided by qualified majority voting in the Council and consultation of the European Parliament.

The CAP has fulfilled its main objective, which was to achieve food self-sufficiency in the Community. Nevertheless, major changes to policy soon proved necessary, in order to correct imbalances and over-production resulting from the CAP. Its objectives have thus changed in the course of time, and the instruments used have also evolved as a result of successive reforms (principally the 1992 McSharry reform and Agenda 2000).

The most recent reform, in June 2003, constituted a major development in the CAP. It brought the following innovations:

  • a single payment per holding for EU farmers, independent of production ("decoupling" of support);
  • linking of these payments to compliance with standards relating to the environment, food safety, animal and plant health and animal welfare ("cross-compliance");
  • a reinforced rural development policy, with reduction of direct payments to large farms in order to fund the new policy ("modulation");
  • a financial discipline mechanism (placing a ceiling on market support expenditure and direct aid between 2007 and 2013).

The reform also includes a revamp of the policy of common organisation of markets under the CAP. Several sectors have already been reformed: tobacco, hops, cotton, olive oil and sugar.

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