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Economics of the Common Agricultural Policy

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  • Rainer Wichern

Abstract

The 2003 reform of the Common Agricultural Policy has been assessed as an important reform in the right direction with respect to allocational efficiency and regarding environmental, animal welfare and food safety requirements. From an economic point of view the introduction of decoupled direct payments will reduce distortions in production decisions and, thus improve sectoral efficiency. Several papers have supported this reform. While acknowledging and supporting these views with respect to the 2003 reform, this paper, however, tries to highlight that the overall support level for the agricultural sector remains relatively high and that most of the farm support still stems from market price support. In systematically analysing the main CAP measures and using most recent figures, it is shown that price support - together with quota restrictions and land set aside obligations - is one of the least efficient CAP instrument currently in place. Thus, the success of the 2003 reform does not allow for a position of leaning back. On the contrary, the drive of previous reforms (1992 and AGENDA 2000) with respect to bringing EU prices down to competitive levels need to be kept and perhaps even be further accelerated.

Suggested Citation

  • Rainer Wichern, 2004. "Economics of the Common Agricultural Policy," European Economy - Economic Papers 2008 - 2015 211, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    • Handle: RePEc:euf:ecopap:0211
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    Citations

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    Cited by:

    1. Roose Antti & Sepp Kalev, 2010. "Monitoring framework for assessing changes of the Estonian rural landscape in adopting European agricultural policies," European Countryside, Sciendo, vol. 2(1), pages 42-59, January.
    2. Hardt, Łukasz, 2008. "Wspólna Polityka Rolna A Polityka Spójności W Kontekście Przeglądu Budżetu Ue," Village and Agriculture (Wieś i Rolnictwo), Polish Academy of Sciences (IRWiR PAN), Institute of Rural and Agricultural Development, vol. 4(141).
    3. Frederic Courleux & Herve Guyomard & Fabrice Levert, 2007. "Étude prospective sur le fonctionnement des marchés des droits au paiement et de la réserve nationale mis en place dans le cadre de la réforme de la PAC de juin 2003," Working Papers hal-01595356, HAL.
    4. Blanco, Maria & Garcia-German, Sol & Bardaji, Isabel, 2011. "El modelo de ayudas directas en la PAC post-2013: análisis de impactos de escenarios potenciales," Economia Agraria y Recursos Naturales, Spanish Association of Agricultural Economists, vol. 11(02), pages 1-26, December.
    5. Franz Sinabell & Hans Pitlik & Erwin Schmid, 2009. "Zukunft der Finanzierung und Ausgaben der Gemeinsamen Agrarpolitik," WIFO Studies, WIFO, number 36165, April.
    6. Gorzelak, Aleksander & Herda-Kopańska, Justyna & Kulawik, Jacek & Soliwoda, Michał & Wieliczko, Barbara, 2017. "Controversies over the European Value Added created by CAP," Problems of Agricultural Economics / Zagadnienia Ekonomiki Rolnej 263847, Institute of Agricultural and Food Economics - National Research Institute (IAFE-NRI).
    7. Blacksell Mark, 2010. "Agriculture and landscape in the 21st century Europe: the post-communist transition," European Countryside, Sciendo, vol. 2(1), pages 13-24, January.

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